Rabobank In $1 Billion Deal To Settle Libor Probe

By Mani
Updated on

Rabobank Group is said to pay $1 billion fine to resolve British and U.S. regulator’s claims over their Libor probe.

Caroline Binham, Daniel Schäefer and Kara Scannell of the Financial Times report the Netherlands’ biggest mortgage lender would face the fine as early as next week.

Libor scandal

Banks and financial Institutions have allegedly manipulated LIBOR between 2005 and 2010 by misguiding the interest rates at which they were able to borrow. Since the scandal broke out, many inquiries were conducted globally on various banks and brokerage firms over LIBOR rigging. London Interbank Offered Rate, or LIBOR, is the standard interest rate for trillions of dollars of credit cards, mortgages, student loans, variable interest-rate notes and other lending products.

In December of last year, UBS AG (NYSE:UBS) settled to pay $1.5 billion in penalties to resolve criminal, civil and regulatory probes by the United States, Britain, Switzerland and Japan associated with the rate rigging. Barclays PLC (NYSE:BCS) (LON:BARC) and Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) have also entered into a settlement with the authorities.

Penalty larger than expected

Caroline Binham, Daniel Schäefer and Kara Scannell of the Financial Times report the likely penalty of close to $1 billion on Rabobank is set to be larger than anticipated and would become the second-largest paid by a financial institution in the rate-rigging scandal.

Earlier, Rabobank was expected to face a fine somewhere between the $470 million imposed on Barclays and the $612 million deal struck by Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS). Rabobank has made an unspecified provision in its first-half results for settling the Libor rate scandal with various regulators.

Citing known sources, Joshua Gallu and Maud van Gaal of Bloomberg report Rabobank’s settlement would resolve claims related to attempts to manipulate a benchmark rate for Japanese Yen. The settlement was expected to be finalized earlier this month, but got held up due to the U.S. government shutdown that limited support staff available to work on the deal.

Rabobank announced last week that is slashed bonuses for almost all its staff including its executive board, as well as suspending several employees. The bank disclosed that it is being investigated for potential manipulation of various Libor rates, including the Brussels-equivalent of Euribor.

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