SWISS bank UBS has been fined €1.2bn by regulators for "extensive and widespread" attempts to rig interbank lending rates.
The bank agreed the settlement after admitting to fraud and corrupt payments to brokers as it sought to manipulate Libor rates to flatter its own financial strength and reputation.
Today's fine, which includes a record €200m penalty from the UK's Financial Services Authority, marks the biggest yet from the industry's Libor-rigging scandal and is far larger than the total of €360m paid by Barclays for Libor manipulation this summer.
The FSA said the misconduct was rife throughout the bank between 2005 and the end of 2010 as UBS traders routinely made requests to colleagues responsible for determining Libor and Euribor submissions in an effort to benefit their own trading positions.
It said that at least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice. The regulator recorded at least 2,000 requests for inappropriate submissions and said many more would have been made orally.
The FSA said misconduct at UBS was "all the more serious" as it had attempted to manipulate Libor submissions at other banks, making corrupt payments to reward brokers for their efforts.
It made corrupt payments of €18,000 a quarter to brokers over at least 18 months, according to the FSA.
Today's report from the FSA revealed incriminating conversations between UBS traders and brokers, saying they would "play the rules" and "return the favour".
One trader said: "I need you to keep it (the six-month Japanese Libor rate) as low as possible... if you do that... I'll pay you, you know, $50,000, $100,000 ... whatever you want... I'm a man of my word."
Another trader said: "...do your best and i'll sort u out."
Bankers referred to each other in congratulatory terms, such as "the three muscateers (sic)", "Superman", and "Captain caos (sic)", the FSA added.
Sergio Ermotti, chief executive of UBS, said the group had "taken decisive and appropriate actions" following the probe.
He added: "We deeply regret this inappropriate and unethical behaviour.
"No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity."
Libor is the umbrella term for benchmark rates that underpin the terms of 500 trillion US dollars of contracts from mortgages to the cost of corporate lending.
The probe, which has embroiled about 20 financial institutions, has accelerated with the first arrests by the Serious Fraud Office taking place last week.
Taxpayer-backed Royal Bank of Scotland has previously said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.
As well as the FSA, UBS said it had also agreed to pay €900m in combined fines to the US Department of Justice and the Commodities Futures Trading Commission, and 59 million Swiss francs (€50m) to UBS's main Swiss supervisor, the Swiss Financial Market Supervisory Authority.
The bank also admitted to committing wire fraud through its office in Japan relating to rate manipulation.
Tracey McDermott, FSA director of enforcement and financial crime, said: "They manipulated UBS's submissions in order to benefit their own positions and to protect UBS's reputation, showing a total disregard for the millions of market participants around the world who were also affected by Libor and Euribor."
UBS said the fines were likely to see it report a loss of around 2 billion to 2.5 billion Swiss francs (€1.6bn to €2.1bn) for the fourth quarter.
The Zurich-based bank, which has around 6,500 staff in London, has endured a turbulent year after the jailing of rogue trader Kweku Adoboli.