Dutch Rabobank fined 774 mn euros over Libor scandal
The Hague: Financial regulators in three countries have fined Dutch Rabobank 774 million euros ($1.1 billion) for its role in the Libor rate-fixing scandal, leading the bank`s top executive to resign.
"The Financial Conduct Authority has fined Rabobank for serious, prolonged and widespread misconduct" relating to Libor, Britain`s FCA said, echoing ruling from US and Dutch authorities.
Libor, or the London Interbank Offered Rate, is a global benchmark that is calculated daily, using estimates from banks of their own interbank rates.
It underpins the terms of $500 trillion of contracts from mortgages to the cost of corporate lending.
However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.
Rabobank had for almost six years between May 2005 and January 2011 allowed money market traders to manipulate Libor submissions to benefit foreign currency trading positions, the FCA said.
Traders also colluded with "individuals at other Libor panel banks and interdealer firms to influence Libor submission, the FCA said.
"Rabobank`s misconduct is among the most serious we have identified on Libor," added Tracey McDermott, the FCA`s director of enforcement and financial crimes.
In response Rabobank said it has "entered into settlements with various authorities and agreed to pay 774 million euros."
Group chairman Piet Moerland has resigned "with immediate effect," the bank said in a statement.
The US Commodity Futures Trading Commission (CFTC) said that Rabobank would pay it $475 million after it "pervasively rigged key interest rate benchmarks".
"Unfortunately, we once again see how the public trust can be violated through bad actors readily manipulating benchmark interest rates," CFTC Chairman Gary Gensler said.
The Libor scandal erupted last year when British bank Barclays was fined £290 million by British and US regulators for attempted manipulation of Libor interbank rates and eurozone equivalent Euribor between 2005 and 2009.