RBS to face US rate-fixing probe

By JOHN FAHEY
Published on 16/08/2012 09:37

ROYAL Bank of Scotland is among three British banks to have been subpoenaed in America over the possible manipulation of a key global interest rate.

The attorneys general of New York and Connecticut also issued the subpoenas to Barclays and HSBC, as well as Citigroup, Deutsche Bank, JPMorgan Chase, and UBS.

RBS bos Stephen Hester has already admitted that the bank will face a penalty for its part in the scandal.

Barclays has already been fined nearly £290 million by regulators in Britain and their transatlantic counterparts.

The bank has admitted that it submitted false information to keep the rate, known as Libor, low.

It was unclear exactly what the detail of the subpoenas involved but they are requests for information backed with the force of the law.

Libor is short for London interbank offered rate and is the lending rate that affects mortgages and loans.

A self-policing system, Libor relies on information that global banks submit to the British Bankers Association.

Barclays has admitted that it submitted figures that were lower than accurate for its interbank borrowing, including during the financial crisis in the autumn of 2008.

Those reports made it appear that Barclays was healthier than it was and the scandal left the bank’s reputation in tatters and sent shockwaves through the entire industry.

UBS filed a report with regulators on 31 July saying that agencies, including state attorneys general were examining whether it and other banks had tried to manipulate the rate.

Last week Sir David Walker - the City grandee who oversaw a review into bank governance for former Prime Minister Gordon Brown - was unveiled as the new chairman of Barclays.

Sir David will join as non-executive director from 1 September before succeeding chairman Marcus Agius who announced his intention to resign in the wake of the Libor-rigging scandal.

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