Rabobank fined $1 billion for Libor failings

Rabobank has been fined £105 million ($168 million) by the UK Financial Conduct Authority (FCA) for serious Libor-related misconduct. In the latest fine relating to the benchmark manipulation scandal, Rabobank has been accused of having poor internal controls that encouraged collusion between traders and Libor submitters. The bank is also accused of allowing systematic attempts at benchmark manipulation in what the FCA describes as serious, prolonged and widespread misconduct relating to Libor.

On top of the FCA fine, Rabobank has been fined $325 million by the US Department of Justice (DoJ). The Dutch bank has also entered into a deferred prosecution agreement with the DoJ, meaning that Rabobank has to admit and accept responsibility for its misconduct and that a criminal information file on such matters has been created in the US District Court of Connecticut.

A further fine of $475 million has been levied on the bank by the US Commodity Futures Trading Commission, plus another €70 million by the Dutch public prosecution service, Openbaar Ministerie.

The chairman of Rabobank's executive board, Piet Moerland, announced his resignation immediately after the fines were imposed.

The UK FCA says that between May 2005 and January 2011, the bank allowed derivatives and money market traders to collude with traders at other Libor panel banks and interdealer firms to influence yen and US dollar submissions made by other panel banks.

Traders are also accused of colluding with other Libor banks and interdealer broker firms who were seeking to influence Rabobank's yen Libor submissions and also of making or influencing others at Rabobank to make Libor submissions that benefitted trading positions linked to sterling, US dollar and yen Libor.

In April 2009, one yen submitter informed the bank's internal audit group that his submissions were based on direct instructions from traders, but the bank failed to address the issue.

The bank itself is charged with failing to act with due skill, care and diligence and failing to identify, manage or control the relevant risks or meet proper standards of market conduct. The FCA found over 500 instances of attempted Libor manipulation at Rabobank, involving at least nine managers and 19 other individuals based across the world. The charges also cite one manager being actively involved in attempted manipulation. This manager is also accused of facilitating a culture where manipulation appeared to be accepted and even endorsed by the bank.

The Rabobank fines come a week after former UBS and Citi trader Tom Hayes appeared in a UK court for the first time in the first criminal trial relating to the Libor scandal. Hayes is alleged to have had a possible 22 co-conspirators, all of whom are currently being investigated by the UK Serious Fraud Office.

Hayes' trial is expected to start sometime after January 2015. He is accused alongside former RP Martin brokers Terry Farr and James Gilmour, who are expected to stand trial separately to Hayes.

Hayes and four others also face charges in the US. Roger Darin, a former UBS trader and Darrell Read, Daniel Wilkinson and Colin Goodman, all formerly of broker Icap, have also been charged.

Icap was fined $87.4 million by UK and US regulators in September this year. This followed Libor-related fines of $612 million for RBS, $1.5 billion for UBS and $450 million for Barclays.