Royal Bank of Scotland said that once it has completed talks with regulators, it could be hit with “material fines” over the means by which LIBOR and other interest rates were set. The talks over a possible settlement are expected to begin soon.
The investigation of RBS by regulators in Britain and in the U.S. over the LIBOR rigging scandal could obscure the performance of the bank as Stephen Hester, its CEO, works on a turnaround, Reuters reported Friday. Hester said that it was up to regulators when a settlement might be worked out.
“The group expects to enter into negotiations to settle some of these investigations in the near term and believes the probable outcome is that it will incur financial penalties,” Hester was quoted as saying. “We have to dance to the tune of the relevant regulators. We are up for settling with all and every one as soon as they are ready.”
While the bank warned that it could face “material fines” over LIBOR, Hester said that it was hard to predict whether RBS would be hit with a larger fine than Barclays, which settled with regulators earlier in the year and paid 290 million pounds ($467 million) over its own charges of LIBOR rigging. The scandal cost Barclays its top officers.
Hester said that even if RBS gets off with a lighter fine than Barclays, it would still be a “miserable day” for RBS. “It is a deeply regrettable thing … this is the sort of thing the industry has to put behind it.”
The bank has fired at least four traders after an internal investigation. Last month it even suspended a senior manager, its head of rates trading for Europe and the Asia-Pacific region.
LIBOR rigging is not the only scandal to dog the bank; Bloomberg reported that it moved into loss territory with an additional set-aside of 400 million pounds as compensation for clients to whom it wrongly sold loan insurance and derivatives, bringing the total to 1.7 billion pounds.