‘Nice Libor, hahaha’ – how traders at RBS allegedly fixed interest rate

ROYAL BANK of Scotland traders boasted about operating a “cartel” that made “amazing” amounts of money by interest-rate-rigging, according to a court document.

The paper, submitted by a former RBS employee, reveals details of internal messages, which appear to show traders claiming they could influence Libor, the rate used to set
borrowing costs for businesses.

Transcripts of the internal
instant messages were included in a 231-page affidavit filed earlier this month by Tan Chi Min, the bank’s former head of delta trading for Asia.

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Mr Tan, based in Singapore, is suing the bank for wrongful dismissal after he was fired last year for allegedly trying to influence Libor.

He wrote in an instant message on 2 April, 2008: “Nice Libor, our six-month fixing moved the entire fixing, hahahah.”

The conversations among traders at RBS and firms including Deutsche Bank AG have been seen as an illustration of how the risk of abuse was embedded in the process for setting Libor.

RBS is one of several financial institutions under investigation over allegations that they colluded to manipulate the rate so they could profit from bets on interest-rate derivatives.

Barclays was fined £290 million in June for rigging the rate. Barclays’ chief executive officer, Bob Diamond, and chairman Marcus Agius resigned in the
aftermath of the scandal.

The 231-page affadavit filed by Mr Tan at Singapore High Court was obtained by the Bloomberg financial news agency.

In August 2007, the year before RBS’s £45 billion taxpayer bail-out, Mr Tan sent a trader based at Duetsche Bank a message, saying it was “just amazing how Libor-fixing can make you that much money or lose it”.

And he added: “It is a cartel now in London.”

A day later, Mr Tan sent a message to Scott Nygaard, global head of RBS’s London Treasury markets: “Neil is the one setting the yen Libor in London
now and for this week and the next.”

Mr Nygaard replied: “Go Neil, hahahahaha.”

Neil Danziger, a trader who has since been sacked by RBS, sent a message asking: “Where would you like it, Libor that is?” Another trader wrote: “Mixed feelings, but mostly I’d like it lower so that the world starts to make a little sense.”

Yesterday, the contents of the messages were a source of concern to Stewart Hosie, the SNP Treasury spokesman.

He said: “These claims are extremely serious and must be fully investigated by the Serious Fraud Office, as well as regulators.#

“With Stephen Hester acknowledging this week that the bank is already braced for signi­ficant fines and legal claims, these new revelations, given that RBS is owned by taxpayers, will add to the public anger at the
behaviour of the banks.”

The Liberal Democrat MSP Tavish Scott said: “The banking industry crashes from one self-inflicted disaster to another.

“People and businesses must have confidence that banks act in their interest, not in get-rich-quick deals for City wide boys. There can be no doubt that separating investment banking from solid retail and business banking must now happen.”

A spokeswoman for RBS said: “Our investigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing. RBS and its employees continue to co-operate fully with regulators.”

• Payment protection insurance (PPI) complaints to financial services firms more than doubled in the first half of this year to reach a new high of more than 2.2 million, the City watchdog, the Financial Services Authority, said yesterday.