RBS is braced for UK and US watchdogs to levy separate rate-fixing fines

Stephen Hester, CEO of RBS. Picture: Getty Images
Stephen Hester, CEO of RBS. Picture: Getty Images
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CONCERNS are growing within Royal Bank of Scotland (RBS) that the shadow of likely Libor-rigging fines hanging over it could be drawn out if transatlantic regulators decide to dole out financial punishments separately.

In the summer, rival Barclays was fined a total of £290 million for Libor-fixing offences on one day by Britain’s Financial Services Authority (FSA) and its American counterparts, the Securities & Exchange Commission (SEC) and the Commodities Futures Trading Commission.

However, the FSA’s £60m slice of the fine meted out was seen as being overshadowed by the scale of the US crackdown.

It is now believed the British regulator is seriously considering announcing a separate settlement with RBS to avoid a repeat, with speculation rising that a UK fine could be levied by the end of this year.

One source familiar with the transatlantic regulatory investigations said: “Ideally, I suppose Royal Bank of Scotland would want it all out of the way in one fell swoop if fines have to fall. But, unfortunately, the timing is not in the bank’s gift.”

RBS declined to comment.

Chief executive Stephen Hester has said publicly that the bank would get its “day in the sun” on the scandal. He has said he would be disappointed if the regulators had not wrapped it up by the time of the Scottish bank’s 2012 results presentation in February 2013.

However, unidentified sources close to the bank were quoted at the weekend as saying possible separate announcements from the FSA and SEC meant RBS might have “several horrible days in the sun” on its traders’ practices regarding Libor.

The backwash from Barclays’ links with the scandal triggered the departure of chief executive Bob Diamond and chairman Marcus Agius.

However, due to the complete senior management changes at RBS since 2008, which followed the period of the Libor-rigging incidents, there is not expected to be any similar boardroom turmoil at the bank.

One analyst commented: “Libor is unlikely to be anything other than bad for RBS reputationally. And I would think they would much prefer any fines by the UK and US regulators to be made simultaneously and get it over with.

“But, having said that, it is historic and does not taint current management. So I don’t think even a fine of, say, several hundred million pounds, would be share-price sensitive.”

In a separate embarrassment for RBS, one of London’s leading restaurateurs – Sami Wasif of Michelin-starred Mayfair restaurant Hakkasan – said he has stopped paying the bank thousands of pounds a month in interest on a complex derivative contract he claims it mis‑sold him.

He has reportedly already missed one payment of nearly £4000 and warned the bank that he would pay no more as a matter of principle. A spokesman for RBS warned customers had contractual obligations.

“If any customer has concerns over payments they should talk to us and we will deal with them on a case-by-case basis,” he said.