Comment: RBS latest to be ensnared in Libor fixing net

By TERRY MURDEN
Published on 17/08/2012 00:00

ROYAL Bank of Scotland edged closer to the Libor-rigging scandal with the subpoeanas issued in the US this week, though it didn’t really need another two writs to tell us that it is already deeply involved.

The attorneys general of Connecticut and New York added their requests for information to a growing list of organisations with whom RBS is co-operating.

Among those undertaking investigations are the US Commodity Futures Trading Commission, the US Department of Justice (fraud division), the Financial Services Authority and the Japanese Financial Services Agency.

The bank is also under investigation by competition authorities in a number of jurisdictions, including the European Commission, Department of Justice (antitrust division) and Canadian Competition Bureau, stemming from the actions of certain individuals in the setting of Libor and other interest rates, as well as interest rate-related trading.

RBS has yet to be found guilty, let alone tried for any misdemeanour though it has dismissed a number of employees for misconduct as a result of its own inquiries into these matters.

Stephen Hester, its chief executive, has also admitted that he expects the bank to be fined for its part in the Libor scandal.

The word in the markets is that each of the banks and the authorities will reach a settlement, not least to limit further damaging headlines.

Probably the best that can be said for RBS is that it is not alone. It was among seven banks that were called to testify on Libor by the Connecticut and New York authorities.

The credit ratings agencies weighed in with another warning that the never-ending list of wrong-doings, including mis-sold payment protection insurance and interest rate swaps, may further weaken their already creaking creditworthiness.

The scandals come with a hefty cost, financially and reputationally. They will cast more gloom over at least the next set of results and delay the day when the cloud of despondency finally lifts.

Nothing cloud-cuckoo about Iomart progress

IOMART is hardly a household name, though perhaps it ought to be. The Glasgow based cloud computing company is a relative minnow among the listed giants, but its progress has been noted by investors who are enjoying a period of strong growth. Those who stuck with it over a decade have seen their returns rise massively; over that period the shares are up from 3p to above 160p.

They knew that they were backing a company founded by two of Scotland’s brightest entrepreneurs, Angus MacSween and Bill Dobbie. MacSween still runs the business, one of the 1990s dotcom survivors, while Dobbie went off to launch another highly successful online venture, Cupid, the dating service.

MacSween yesterday unveiled a couple of small acquisitions that will bolster its balance sheet and underpin one of Scotland’s growth stories.

M&S gambles on alternative banking

The world of alternative banking took another step forward yesterday with the launch of Scotland’s first branch of M&S Bank. As our story on page 39 explains, it will appeal directly to Marks & Spencer’s shoppers who will be lured through a combination of loyalty schemes and soft furnishings.

M&S came in for some stick for charging customers up to £20 a month. So much for free banking. But the company will offer vouchers to be redeemed in the store as an incentive.

M&S Bank is, to a degree, a makeover for M&S Money which has been long established. But it is also a bit of a gamble. M&S splits the profits from financial services equally with its joint venture partner HSBC and neither is expecting it to be a massive contributor to growth.

The in-store branch concept is also unproven. Tesco tried and failed to make the idea work. Sainsbury’s never bothered. There is mixed evidence on how much customers shopping for groceries or a new bra and pants are interested in discussing a new mortgage. Its success may therefore depend on cross-selling and whether those incentives and comfy sofas prove enough of a temptation to shoppers.