``UBS can absorb the immediate pain. The total 1.4 billion Swiss franc in penalties amounts to the group's pre-tax profit in the third quarter, about a third of last year's net profit. UBS used the settlement as an opportunity to issue a profit warning for the fourth quarter. But the expected 2 to 2.5 billion Swiss franc loss, which relates to the fine as well as restructuring and accounting charges, has already been baked into the share price.

UBS's long-term future looks less certain. The UK's Financial Services Authority's settlement notice raises the prospect of future litigation, with a reference to the "serious harm" the bank's misconduct could have done to other market participants. UBS's Chief Executive Sergio Ermotti acknowledges as much: he has said the impact on clients is far from understood. In part, this is because Libor is an industry issue and only Barclays and UBS have so far settled with authorities. As many as 10 rivals could follow.''

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