Rabobank pays $1bn to settle Libor allegations

Dutch lender Rabobank has paid more than $1 billion (€727 million) to US, British and Dutch authorities to settle allegations that it manipulated Libor and other key benchmark rates, a scandal that has implicated top managers and claimed the bank's chief executive.

Rabobank said yesterday that almost 30 employees had been involved in "inappropriate conduct", and that its chief executive, Piet Moerland, would resign with "immediate effect". Rinus Minderhoud, a member of the bank's supervisory board, will replace him on an interim basis, it said.

The total $1.06 billion fine levied against the co-operative bank is far more severe than original estimates, after authorities found pervasive misconduct over six years reaching into the echelons of management. It is the second- highest legal settlement in the sprawling Libor inquiry, after the $1.5 billion paid by UBS last December.

Rabobank, which owns ACCBank in Ireland and last week announced its intention to close that bank’s branch network, admitted to the misconduct through a so-called deferred prosecution agreement with the US department of justice.

The authorities found that about 26 Rabobank employees, including seven managers, had attempted to manipulate both Libor and Euribor, the Brussels equivalent, in three different currencies from 2005 to 2011 at locations including Tokyo, London, Utrecht and New York.

Fraudulently moving market
"For years, employees at Rabobank, often working with traders at other banks around the globe, illegally manipulated four different interest rates – Euribor and Libor for dollar, yen, and sterling – in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank's counterparties," said Mythili Raman, acting assistant attorney general of the justice department's criminal division.

There were 508 documented requests to rig Libor and Euribor, the authorities said, including 12 requests from Rabobank employees to two people at a rival bank that also submitted rates.

Four brokers at two interdealer brokerage firms were also involved, the authorities alleged. – (Copyright The Financial Times Limited 2013)