Royal Bank of Scotland fined by U.S., U.K. for rate-rigging
BY DANICA KIRKA Associated Press
Thursday, February 07, 2013
2/07/13 at 4:01 AM
LONDON - U.S. and U.K. authorities fined the Royal Bank of Scotland more than $610 million Wednesday for its role in the manipulation of a key global interest rate - with the bank pledging to make the rate-riggers and their managers foot the bill.
RBS is the third major bank caught up in an international scandal over banks' setting the rate. The London interbank offered rate, or LIBOR, provides the basis for trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
In its statement, the U.S. Commodity Futures Trading Commission said it found that as recently as 2010 and dating back to 2006, RBS employees "made hundreds of attempts" to rig the yen and Swiss franc LIBOR, as well as making false LIBOR submissions to benefit its trading positions.
U.S. and U.K. regulators fined RBS more than $460 million for rate-rigging. Meanwhile, a unit of RBS agreed to plead guilty in a Department of Justice investigation and accepted a penalty of $150 million. It will cooperate in the U.S. government probe.
The investigations by the three organizations uncovered wrongdoing by 21 members of RBS's staff - all of whom have either left the company or a subject to disciplinary proceedings. The bank, which is 80 percent owned by the British government after it was bailed out in the 2008 banking crisis, has said it will pay the fines by canceling the 2012 bonuses and clawing back money from previous bonuses of the staff involved - as well as supervisors with accountability for the business.
"LIBOR manipulation is an extreme example of a selfish and self-serving culture that took hold in parts of the banking industry during the financial boom," RBS chief executive Stephen Hester said in a statement.
"We will use the lessons learned from this episode as further motivation to reject and change the vestiges of that culture."
The action against RBS "demonstrates yet another clear case of a bank falsely reporting and attempting to manipulate or successfully manipulating benchmark rates to increase trading profits," CFTC Chairman Gary Gensler said in a statement. "Such false reporting of benchmark rates undermines the integrity of markets and shakes the public's trust in our financial system."
Gensler called in September for an overhaul of the process for setting the LIBOR rate, saying consumers need more confidence that it is set honestly and transparently.
Original Print Headline: Fines levied in rate-fixing scandal
The Royal Bank of Scotland logo hangs on the wall of the company's headquarters in London. U.S. and British authorities fined the bank more than $610 million Wednesday for its role in the manipulation of a key global interest rate. Bloomberg file