The former yen derivatives trader at UBS (>> UBS Group AG) and Citigroup (>> Citigroup Inc) has pleaded not guilty to eight counts of conspiracy to defraud between 2006 and 2010, a criminal offence that carries a maximum jail sentence of 10 years. He has not yet begun to lay out his defence.

Hayes, 35, is the first person to go on trial over alleged manipulation of the London interbank offered rate (Libor) after a seven-year global inquiry that has led to banks and brokerages paying around $9 billion in fines.

The Libor benchmark is used to price an estimated $450 trillion of financial contracts and loans worldwide.

Prosecutor Mukul Chawla told the jury at Southwark Crown Court that Hayes had signed a formal cooperation agreement in March 2013 with Britain's Serious Fraud Office (SFO) that would have made him eligible for a reduction in his sentence.

Hayes made "complete confessions" during 82 hours of interviews with the SFO over six months, Chawla said. But Hayes later changed his legal team and in October 2013 his new lawyers wrote to the SFO to say he was withdrawing cooperation, Chawla said.

He said Hayes' position now was that he had only entered the agreement with the SFO because he was afraid of being extradited to the United States, where the Department of Justice was also investigating his alleged role in rigging Libor.

"The reality is that he simply changed his mind," Chawla told the court. "Was he lying to the SFO then, is he lying now, or is he simply a man out for himself, thoroughly dishonest and manipulative?"

Lawyers for Hayes will set out his defence in detail later on in the trial, which is due to last 10 to 12 weeks.

In an excerpt from audio recordings of SFO interviews with Hayes that was played in court, an investigator was heard asking: "Do you admit that you acted dishonestly in the manipulation and attempted manipulation of submissions made for Libor?"

Hayes answered "yes."

In another excerpt, Hayes was heard saying he had been aware at the time that he was being "dishonest on a micro scale," that from the outside his conduct would have looked "dodgy" and that he "wasn't going to get a medal from the regulator."

But he said, "I didn't think that I was basically Bernie Madoff, in your terms".

In another excerpt, Hayes was heard referring to a particular attempt to persuade submitters to raise their 6-month Libor figures to suit his trading book as "basically price fixing" and "the most dishonest" thing he had done as a trader.

But after an interruption from his lawyer, he went on to say in the excerpt that he was "participating in an industry-wide practice that pre-dated my arrival at UBS and post-dated my departure."

Having left UBS because he felt his bonuses there had not been good enough reward for the approximately $300 million he had made for the bank over several years, Hayes signed up with Citi where he started trading in February 2010.

Chawla showed the jury excerpts from computer chats where Hayes was reconnecting with a network of contacts in other banks and brokerages with whom he had previously allegedly conspired, during his UBS years, to manipulate Libor.

The evidence, which included audio recordings of telephone conversations, also showed him tentatively approaching Citi's own Libor submitters to try and influence them to provide figures that would be favourable to his trading positions.

From his office in Tokyo, he repeatedly urged a more junior colleague in London to speak to one of the submitters, Burak Celtic.

In one call, he advised his junior colleague to "just try and catch him (Celtic) down in the toilet or something" to have a confidential conversation about Libor rates.

Chawla told the court that the colleague eventually plucked up the courage to ask Celtic to modify a Libor submission on Hayes' behalf on June 25, 2010. Chawla said Celtic refused to do so and immediately reported Hayes to his boss, Andrew Thursfield.

Citi launched an internal investigation into Hayes' conduct which resulted in his dismissal in September 2010, Chawla told the court. He said Hayes had been paid about 3.5 million pounds ($5.32 million) by Citi during his employment, which lasted just under a year.

Hayes then returned from Japan to England, where he was arrested in December 2012.

($1 = 0.6579 pounds)

(Editing by Jane Merriman)

By Estelle Shirbon

Stocks treated in this article : Citigroup Inc, UBS AG, UBS Group AG