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Home >Companies >Rabobank fined $1.1 billion over Libor, Euribor manipulation

Rabobank Groep, the co-operative formed in 1898 to lend to Dutch farmers, was fined €774 million ($1.1 billion) for its involvement in rigging benchmark interest rates, the second-largest in the global investigation.

The bank’s chairman, Piet Moerland, said he would resign.

The lender, based in Utrecht, Netherlands, was fined by the US Commodity Futures Trading Commission, the Department of Justice (DOJ), the UK Financial Conduct Authority and the Dutch public prosecutor’s office, the regulators said in statements on Tuesday.

The fine brings the total settlements in the rate-rigging probe to $3.7 billion.

Rabobank entered into an agreement with the Justice Department to accept responsibility for manipulation of Libor and Euribor to avoid prosecution, the DOJ said.

The FCA called the misconduct serious, prolonged and widespread.

The fines make Rabobank the fifth firm penalized over manipulation of the London interbank offered rate.

Global investigations into banks’ attempts to manipulate the benchmarks for profit have led to fines and settlements for Barclays Plc, Royal Bank of Scotland Group Plc, UBS AG and ICAP Plc.

Rabobank derivatives and money market traders influenced the lender’s submissions to benefit their positions linked to Libor and conspired with employees of other banks to rig rates from May 2005 to January 2011, the FCA said.

More than 500 attempts were made by Rabobank to manipulate Libor, according to the regulator.

30 employees

“Rabobank’s misconduct is among the most serious we have identified on Libor, Tracey McDermott," the FCA’s head of enforcement, said in a statement.

Traders and submitters treated Libor submissions as a potential way to make money, with no regard for the integrity of the market.

“Thirty current and former employees of the Dutch lender were involved, Rabobank executive board member Sipko Schat" said on Tuesday.

Five of them were fired, he said.

Moerland, 64, said in June he would retire next year after more than 30 years at the biggest Dutch mortgage lender. He will be temporarily replaced by Rinus Minderhoud, 67, a member of the bank’s supervisory board since 2002, the bank said in a statement.

Moerland isn’t the first top executive to step down because of Libor.

Robert Diamond stepped down as chief executive officer of Barclays Plc after the London-based bank was fined 290 million pounds ($466 million) for manipulating Libor last year.

Policies lacking

Rabobank, the only one of the four largest Dutch lenders that didn’t take state aid during the financial crisis, has seen its image as one of Europe’s safest banks dented. It lost its AAA rating at Standard & Poor’s in 2011 and has been subpoenaed or asked for information in the rate-rigging probe in the European Union, Japan, Hong Kong, Singapore, Switzerland and the Netherlands.

We were startled by the amounts, which were higher than we had anticipated, taking into account regulators found no involvement from the bank’s management board or senior managers, Schat said.

Regulators also hold against us that our internal organization wasn’t set up adequately, with Libor policies lacking.

Rabobank’s Tokyo branch was also penalized by the Japanese Financial Services Agency, which ordered the bank to submit a plan to improve its compliance and internal controls, the regulator said in a statement on Tuesday.

Tuesday’s settlements don’t mean the investigations are over, Schat said, as several regulators haven’t completed their probes yet.

Rabobank admitted to manipulating Libor and Euribor submissions which directly affected the rates referenced by financial products held by and on behalf of companies and investors around the world, Valerie Parlave, assistant director in Charge of the Federal Bureau of Investigation’s (FBI) Washington field office, said in a statement. Rabobank’s actions resulted in the deliberate harm to counterparties holding products referencing the manipulated rates. BLOOMBERG

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