UBS Group AG will pay $545 million to settle U.S. investigationsinto its role in manipulating currency and interest rates, removingtwo of the bank's biggest legal hurdles.

The lender's main unit, UBS AG, will plead guilty to fraud formanipulating benchmark interest rates and pay $203 million in finesafter the Swiss bank violated an agreement that had allowed it toavoid prosecution, UBS said in a statement Wednesday.

In the currency case, UBS said it will pay $342 million to theFederal Reserve, which regulates foreign banks, and undertakeremedial measures. It won immunity for cooperating in a parallelantitrust probe, sparing the bank possible fines and felony chargeson that score.

Four other global banks are expected to announce U.S.settlements Wednesday over manipulating foreign exchange rates,people with knowledge of the discussions have said. Citigroup Inc.,JPMorgan Chase & Co., Barclays Plc and Royal Bank of ScotlandGroup Plc will probably enter pleas related to antitrustviolations, the people said.

UBS's settlement was lower than some analysts expected. JPMorganChase & Co's Kian Abouhossein had estimated the fine at 3billion francs, he said Wednesday in a note to clients. Shares wereup 3.1 percent at 20.44 francs at 10:30 a.m. in Zurich.

UBS resolved the foreign exchange case under terms that are“clearly better than expected” and the guilty plea in the interestrate probe probably won't have a “very negative impact,” saidAndreas Venditti, a Zurich-based analyst at Vontobel HoldingAG.'

The currency investigation led the U.S. Justice Department torip up a 2012 non-prosecution agreement with UBS that was designedto settle an earlier probe into the rigging of the London interbankoffered rate, or Libor. The deal was conditional on the bank notcommitting further U.S. crimes during the next two years. Theforeign exchange probe began less than a year later.

The new Libor settlement marks the first time the JusticeDepartment has revoked a non-prosecution agreement in the bankingindustry and signals its determination to crack down on repeatoffenders. UBS said it will plead guilty to one count of wire fraudand accept a three-year probation.

“It's disappointing they've had to plead guilty on a separatecharge on Libor,” said Christopher Wheeler, an London-based analystat Atlantic Equities LLP in an interview with Bloomberg Televisionon Wednesday. “Sadly the reputational damage has been done.”

'Unacceptable Conduct'

UBS's guilty plea raises the prospect of the bank having to seekpermission from U.S. regulators to keep operating in certain linesof business, including managing mutual funds and pensions forAmericans. UBS didn't comment on waivers in its statementWednesday.

UBS said it has no need to set aside further provisions for thesettlements and that they would have no financial impact onsecond-quarter earnings. Rising legal costs have been a burden onearnings since the financial crisis and a stumbling block for ChiefExecutive Officer Sergio Ermotti in boosting profitability.

“The conduct of a small number of employees was unacceptable andwe have taken appropriate disciplinary actions,” Ermotti and UBSChairman Axel Weber said in the joint statement. “We madesignificant investments to strengthen our control framework andcompliance programs.”

The Libor and currency probes were two of the biggest legalthreats UBS faced as it scales back activities in investmentbanking, the business that led prosecutors to its doorstep. Thebank continues to cooperate with other authorities in theindustry-wide matter, including investigations of individuals.

Wednesday's settlements bring UBS's bill for attempting tomanipulate markets to more than $2.8 billion. That includes $1.7billion in the Libor case and the $800 million UBS paid last yearto U.S., U.K. and Swiss regulators over its role in rigging foreignexchange rates.

The Justice Department has come under criticism in recent yearsfor the deferred- and non-prosecution agreements it has reachedwith banks, with lawmakers and other critics saying the dealsweren't an adequate deterrent. The government counters that theagreements lead to oversight and cooperation that otherwisewouldn't be possible.

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.