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| RBS fined £390m for 'widespread misconduct' in Libor-rigging scandal | RBS fined £390m for 'widespread misconduct' in Libor-rigging scandal |
| (35 minutes later) | |
| Royal Bank of Scotland has been fined £390m for "widespread misconduct" in rigging the Libor rate until as recently as November 2010 – two years after it was bailed out by the taxpayer and even after regulators had begun to investigate the key benchmark rate. | Royal Bank of Scotland has been fined £390m for "widespread misconduct" in rigging the Libor rate until as recently as November 2010 – two years after it was bailed out by the taxpayer and even after regulators had begun to investigate the key benchmark rate. |
| Publishing a series of embarrassing electronic exchanges between RBS traders and those at rival banks and interdealer brokers, the Financial Services Authority said it had found at least 219 requests of inappropriate submissions were documented and an unquantifiable number of oral requests. Some of this carried on until last year. | Publishing a series of embarrassing electronic exchanges between RBS traders and those at rival banks and interdealer brokers, the Financial Services Authority said it had found at least 219 requests of inappropriate submissions were documented and an unquantifiable number of oral requests. Some of this carried on until last year. |
| Corrupt brokerage payments were made to one broker firm to "garner influence" and the firm "abetted UBS's attempts to manipulate" Libor in Japanese yen. The Swiss bank has already been fined £940m. | Corrupt brokerage payments were made to one broker firm to "garner influence" and the firm "abetted UBS's attempts to manipulate" Libor in Japanese yen. The Swiss bank has already been fined £940m. |
| One electronic exchange shows an RBS yen Libor submitter joking: "I'm like a whores' drawers." An interdealer broker is quoted saying to an RBS Libor submitter: "I'll send lunch around for everybody." | |
| Stephen Hester, the chief executive, condemned the behaviour of the 21 "wrongdoers" at the bank who have either left or been disciplined. | |
| "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," said Hester, who will remain at RBS, which is 82% owned by the taxpayer. | "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," said Hester, who will remain at RBS, which is 82% owned by the taxpayer. |
| John Hourican, the head of the investment bank, is to leave "in recognition of the management issues identified in relation to this settlement and the impact on the group's reputation". The bankers' bonus pot at RBS is to be reduced by £300m towards the cost of the fine, the majority of which will go to US regulators. The Commodity Futures Trading Commission (CFTC) has fined RBS $325m (£207m) and the US department of justice (DoJ) has imposed a fine of $150 (£95m). The FSA fine is £87.5m. | John Hourican, the head of the investment bank, is to leave "in recognition of the management issues identified in relation to this settlement and the impact on the group's reputation". The bankers' bonus pot at RBS is to be reduced by £300m towards the cost of the fine, the majority of which will go to US regulators. The Commodity Futures Trading Commission (CFTC) has fined RBS $325m (£207m) and the US department of justice (DoJ) has imposed a fine of $150 (£95m). The FSA fine is £87.5m. |
| As part of the agreement with the DoJ, the bank has entered into a deferred prosecution agreement on one count of wire fraud relating to Swiss franc Libor and one count for an antitrust violation relating to yen Libor. RBS's Japanese subsidiary has entered a plea of guilty to one count of wire fraud relating to yen Libor. | As part of the agreement with the DoJ, the bank has entered into a deferred prosecution agreement on one count of wire fraud relating to Swiss franc Libor and one count for an antitrust violation relating to yen Libor. RBS's Japanese subsidiary has entered a plea of guilty to one count of wire fraud relating to yen Libor. |
| The CFTC had asked RBS to conduct an investigation into US dollar Libor in April 2010 but while some employees involved in the misconduct were aware of the investigation, they continued their "manipulative conduct". | The CFTC had asked RBS to conduct an investigation into US dollar Libor in April 2010 but while some employees involved in the misconduct were aware of the investigation, they continued their "manipulative conduct". |
| The regulators said RBS "abetted UBS's attempts to manipulate" yen Libor by using wash trades – trades that generate commission but cancel each other out – and on at least one occasion. RBS also requested the assistance of an interdealer broker to influence the submissions of multiple panel banks in an attempt to manipulate yen Libor, the regulators said. | The regulators said RBS "abetted UBS's attempts to manipulate" yen Libor by using wash trades – trades that generate commission but cancel each other out – and on at least one occasion. RBS also requested the assistance of an interdealer broker to influence the submissions of multiple panel banks in an attempt to manipulate yen Libor, the regulators said. |
| The bank allowed the manipulation to go on for years. The FSA said RBS had "attested" in March 2011 that its Libor-related systems and controls were adequate. "This was inaccurate as RBS's systems and controls were inadequate," the regulator said. RBS had failed to identify the risks that submitters would make Libor submissions that took into account derivative trader requests and the impact on the profitability of transactions in their money market books. | The bank allowed the manipulation to go on for years. The FSA said RBS had "attested" in March 2011 that its Libor-related systems and controls were adequate. "This was inaccurate as RBS's systems and controls were inadequate," the regulator said. RBS had failed to identify the risks that submitters would make Libor submissions that took into account derivative trader requests and the impact on the profitability of transactions in their money market books. |
| The CFTC said profitability of RBS's yen and Swiss franc derivatives positions, such as interest rate swaps, depended on yen and Swiss franc Libor, as did certain of RBS's money market positions. | |
| "RBS traders would ask their colleagues to make false Libor submissions that were beneficial to RBS's trading positions. The traders' requests were either for falsely high submissions or falsely low ones, whatever was needed to turn a profit," the CFTC said. | "RBS traders would ask their colleagues to make false Libor submissions that were beneficial to RBS's trading positions. The traders' requests were either for falsely high submissions or falsely low ones, whatever was needed to turn a profit," the CFTC said. |
| RBS had allowed the manipulation to take place by placing derivatives traders and submitters together on the same desk, heightening the conflict of interest between the profit motives of the traders and the responsibility of submitters "to make honest submissions". Even when they were separated – for business, not compliance reasons – the misconduct continued through Bloomberg chats and an internal instant messaging system. | RBS had allowed the manipulation to take place by placing derivatives traders and submitters together on the same desk, heightening the conflict of interest between the profit motives of the traders and the responsibility of submitters "to make honest submissions". Even when they were separated – for business, not compliance reasons – the misconduct continued through Bloomberg chats and an internal instant messaging system. |