Rabobank of the Netherlands has agreed to pay about USD 1 billion to settle US, British and Dutch charges of manipulating a key global interest rate. It became the fifth financial firm sanctioned in the international rate-rigging scandal.
The amount Rabobank is paying includes USD 325 million in an agreement with the US Justice Department that allows the bank to avoid criminal prosecution in exchange for its continued cooperation in the investigation of major banks' conduct regarding LIBOR.
The authorities said today that Rabobank, one of the world's largest banks, engaged in rigging of the London interbank offered rate, or LIBOR, from 2005 to 2011.
Rabobank announced that Piet Moerland, chairman of the executive board, was resigning, effective immediately. "On behalf of the bank and the executive board I want to send a very clear signal: a sincere apology and strong condemnation of these inappropriate acts," Moerland said in a statement. "I have decided to resign."
The LIBOR rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans. A British banking trade group sets the rate daily after more than a dozen big banks submit estimates of their borrowing costs.
Britain's Barclays and Royal Bank of Scotland, Switzerland's biggest bank UBS and British brokerage ICAP have paid a total of about USD 2.6 billion to settle charges of rigging the LIBOR.
The US Commodity Futures Trading Commission levied a USD 475 million civil penalty against Rabobank, saying its traders engaged in "hundreds of manipulative acts" that hurt the integrity of the LIBOR rate. The traders caused inaccurate submissions of its borrowing costs to be made that benefited banks' trading positions.
Rabobank settled the CFTC's charges of manipulation and false reporting, and aiding the attempts of traders at other banks to manipulate the LIBOR. In addition to paying the penalty, the bank agreed to take steps to ensure that it submits accurate estimates of its borrowing costs used to calculate the rate.
In addition, Britain's Financial Conduct Authority fined Rabobank about USD 170 million and the Dutch Public Prosecutor's Office signed a deferred prosecution agreement with Rabobank in which the bank is paying USD 96.5 million.
