RBS confirms sackings over Libor interest rate scandal
ROYAL BANK of Scotland confirmed for the first time yesterday it had dismissed staff over an interest rate rigging scandal but the bank gave no indication whether it might settle soon with investigators.
Reporting a drop in first-half operating profit, RBS said it was co-operating with governments and regulators investigating the role of a number of banks in the setting of Libor and other inter-bank lending rates.
“I think that the regulators must decide how they want to deal with the situation. We will stand up and take any punishment that comes our way,” chief executive Stephen Hester said.
He said he believed the Libor issue had been a result of “wrongdoing by individuals” rather than a “systemic problem” within the industry.
“The Libor situation is a stark reminder of the damage that individual wrongdoing and inadequate systems and controls can have in terms of financial and reputational impact,” Mr Hester said.
The Libor scandal has already cost the job of Barclays chief executive Bob Diamond.
RBS said it was being investigated by regulators in the United States, Britain and Japan and by competition authorities in Europe, the United States and Canada. It said it was not possible to measure reliably what effect the investigations would have, including the timing and amount of fines or settlements.
Rival bank Barclays was fined $453 million last month by US and UK regulators after staff reported false interbank rates – the interest charged when banks lend to each other – that were above or below the real rates. Rates reported by a panel of banks are used to calculate Libor (London Interbank Offered Rate).
RBS has declined to name the dismissed staff but sources with knowledge of the matter said last month that RBS had fired four traders. They said Tan Chi Min, Paul White, Neil Danziger and investment adviser Andrew Hamilton were sacked at the end of last year.
None was available for comment.
New details from court documents and sources suggest that groups of traders working at three major European banks, including RBS, were heavily involved.
Mr Tan, the former head of delta trading for RBS in Singapore, was fired in November for allegedly trying to influence the banks’ rate setters improperly. He is suing RBS for unfair dismissal, alleging the practice of traders providing input to rate setters was widely known among senior managers at the bank.
The Libor scandal has heaped pressure on Mr Hester, who was appointed chief executive four years ago to rebuild the bank and its reputation after a bailout in 2008 during the financial crisis.
RBS, which is currently now 82 per cent owned by the British government, reported a first-half operating profit of £1.83 billion, down from €1.97 billion in the same period last year. The bank made a statutory pretax loss of £1.5 billion.
There was speculation this week the UK might fully nationalise RBS to force it to lend more to business but government sources said there were no such plans. – (Reuters)