FRAUD, bribery and rate-rigging in the banking industry were laid bare as Swiss bank UBS agreed a £940 million settlement with regulators.

The Financial Services Authority said attempts at UBS to manipulate Libor interbank lending rates were "extensive and widespread", while traders were openly bribing and colluding with external brokers.

The fine, which includes a record £160m FSA penalty, marks the biggest yet from the industry's Libor-rigging scandal and is far larger than the £290m paid by Barclays for Libor manipulation this summer.

Zurich-based UBS, whose former rogue trader KwekUAdoboli was jailed earlier this year for gambling away £1.4 billion, agreed the settlement with the FSA, along with regulators in the US and Switzerland after admitting fraud in its Japanese arm and corrupt payments to brokers as it sought to manipulate Libor rates to flatter its own financial strength and reputation.

Taxpayer-backed Royal Bank of Scotland hopes to settle any claims over Libor manipulation soon and has warned that potential penalties could be significant.