Switzerland’s largest bank UBS warned it faced new fines after confirming it was holding talks to settle allegations it was involved in rigging foreign exchange rates.

Authorities from around the world are investigating allegations that dealers at major banks colluded and manipulated key reference rates in the $5.3 trillion-a-day foreign currency market, the world’s biggest and least regulated.

UBS has started settlement talks with some of the investigating authorities, the bank said in a share-swap prospectus published yesterday. The terms proposed in the talks included findings that UBS did not have adequate controls over its foreign exchange business, it said.

UBS said it could face “material monetary penalties” in any deal struck. The foreign exchange probe is one of several legal headaches facing the bank as it shrinks its investment banking business.

It raised its provision against future litigation to 1.98 billion Swiss francs earlier this year but has warned this might not be enough to cover possible fines and charges.

UBS did not identify the regulators it was talking to but sources told Reuters on Friday that Britain’s Financial Conduct Authority was talking to UBS and five other banks – Barclays, HSBC, Royal Bank of Scotland, JP Morgan and Citi – about a possible settlement that could results in each bank being fined hundreds of millions of pounds.UBS said in its prospectus that other authorities could start settlement talks “in the near future”.

The US authorities, which traditionally levy far higher fines than their British counterparts, are not part of the UK negotiations. Stung by a previous scandal into manipulation of benchmark interest rates which saw it pay out $1.5 billion in fines and penalties, UBS has tried to stay on top of the foreign exchange probe.

UBS has tried to stay on top of the foreign exchange probe

It suspended at least five traders and approached US authorities last year with information in the hope of gaining antitrust immunity if charged with wrongdoing.

UBS said yesterday it would continue to take “appropriate action” over personnel in connection with the foreign exchange probe.

Britain’s Lloyds Banking Group said yesrterday it had dismissed eight staff following an investigation into manipulation of benchmark interest rates after it was fined in July by American and British regulators.

So far, more than 30 traders from various banks have been put on leave, suspended or fired in connection with the FX probe. No individual or bank has been formally accused of any wrongdoing.

The prospectus UBS published is aiming to attract investors to swap their shares into a new group holding company, a restructuring effort designed to ensure it can be broken up more easily in a crisis.

Updated figures showed the bank has made a profitable start to the third quarter. Retained earnings as of Aug. 31 rose by 731 million Swiss francs to 27.1 billion Swiss francs ($28.44 billion) from 26.3 billion francs in the second quarter.

A spokesman for UBS said it does not disclose what is in its retained earnings figure.

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