Rabobank to pay $1 bln fines to settle with global regulators

Libor misconduct fines keep on pouring a full year after the scandal has shaken the financial industry.

The Dutch bank Rabobank has settled for $475 mln with the US’s CFTC, £105 million will be paid to the UK’s FCA, whilst the rest of the billion dollar hit to the bank’s balance sheet will be paid to the Dutch Public Prosecutor (DPP), De Nederlandsche Bank (DNB), the US Department of Justice and the Japanese Financial Services Agency (JFSA). The fines are the conclusion of Rabobank’s participation in the rigging of interest rate benchmarks LIBOR and EURIBOR.

While the bank has agreed to enhance compliance, reduce risk of future mishaps and improve its employees culture the CEO Piet Moerland has announced his resignation. He has strongly and vociferously criticized the inappropriate business conduct of about 30 Rabobank employees, as the top management was neither involved nor aware of the inappropriate conduct.

As it is already clear, a number of the bank’s employees colluded and influenced Rabobank’s LIBOR and EURIBOR submissions between 2005 and 2010 to influence the price of derivatives related to the benchmarks in question. On top of that several of the bank’s employees inappropriately communicated with other banks and brokerages regarding specific LIBOR and EURIBOR submissions.

As it is a clear blow to the public’s trust in banking institutions, such misconducts are quite unfortunate and can only pour some fuel into the fire against the financial services industry participants. While regulatory bodies expressed their gratitude for the full cooperation that the bank has provided while the investigation was going on, we can only hope that credibility and transparency will be essential parts of the future of financial services.

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