RBS and Barclays bankers face arrest in weeks over Libor

RBS has a hefty fine to pay as a result of the interbank lending rate scandal. Picture: Getty
RBS has a hefty fine to pay as a result of the interbank lending rate scandal. Picture: Getty
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FORMER Royal Bank of Scotland and Barclays traders could be arrested within weeks over their role in a major rates-rigging scandal.

The UK’s Serious Fraud Office confirmed yesterday that “significant developments are expected in the near future” in the investigation into fixing of the London Interbank Offered Rate (Libor) – at which banks lend to each other.

Royal Bank of Scotland has sacked four members of staff over their alleged role in Libor fixing, while Barclays was fined £290 million last week for attempting to manipulate lending rates.

Now police, directed by Serious Fraud Office (SFO) prosecutors, are understood to be preparing to arrest former traders from both RBS and Barclays along with former employees of UBS AG (UBSN).

An investigation source was reported to have said that the arrests would be made within the next month.

That would allow police to question those suspected of being involved in the scandal under caution.

The SFO has 40 people working on the Libor rate-manipulation inquiry, which was opened in July at the request of British politicians.

John Wilson, SNP MSP, welcomed the move as he called on the authorities to pursue allegations against those suspected of being involved in rate-fixing.

He said: “If the information is true about the imminent arrests of former staff from RBS and Barclays linked to involvement in the Libor rate-fixing scandal, then it shows the seriousness of the alleged financial crime undertaken by these traders.

“If charges are brought and prosecutions proceed then I’d trust that the courts would deal with them in such a way that sends out a message to other financial institutions in the UK that this type of activity will not be tolerated.”

Regulators across the globe are investigating claims banks attempted to fix the Libor rate, in an effort to benefit traders or so that certain lenders would appear financially healthier.

Financial regulators in the US and UK are looking into how derivatives traders and bankers who submitted interest-rate data colluded to rig benchmarks to benefit their trades, and whether lenders attempted to hide their true cost of borrowing.

Criminal investigations by the SFO and US Department of Justice (DOJ) are running alongside civil investigations being conducted by the DOJ’s fraud division, the US Commodity Futures Trading Commission and the UK’s Financial Services Authority (FSA).

The SFO is also co-operating with the DOJ on requests for access to information from the UK about rate-fixing by traders.

However, the investigation is unlikely to lead to raids on banks.

David Green, SFO director, said it was currently targeting individuals and considering if charges could be brought against firms.

However, in order to do so, the agency would have to prove that a “controlling mind” at a bank knew of the activity.

David Cameron has warned MPs must “get to the truth [of the Libor scandal] quickly”.