The Royal Bank of Scotland is not having a good week. Earlier in the week they became the latest to be subject to investigation on the grounds of money laundering. Now they are embroiled in the Libor scandal, with one trader claiming that anyone at RBS had the opportunity to rig the benchmark interest rate:
A former trader for Royal Bank of Scotland Group has claimed that the bank’s internal checks were so lax that anyone could change Libor rates [...]
Court documents filed in Singapore show that Tan Chi Min, who is suing RBS for wrongful dismissal, claimed that in 2008 a trader for the bank, Will Hall, changed the Libor submission himself even though he was part of the Japanese yen swap desk in London.
The papers show that Tan, who worked for RBS in Singapore, raised the issue at his disciplinary meeting last September, saying that the bank’s internal procedure in London seemed to be that “anyone can change Libor”.
Tan alleges that the bank’s minutes of his disciplinary meeting omitted details of this and other conversations about how traders at the bank tried to influence RBS’s interbank lending rate submissions.
This goes much further than what we knew about Barclays, for example. There, those responsible for submitting Libor had to be sweet-talked into changing the rate. At RBS, there was apparently no internal control whatsoever. And you have the cover-up aspect.
One fun sidelight here is that RBS is owned by the state, with taxpayers holding an 82% stake. And so Labour MPs have asked George Osborne, the Chancellor of the Exchequer in Britain, what he knew about all this. Obviously a scandal of this magnitude would have an impact on RBS’ share value, so poor stewardship by the state comes into play as an issue.
I think we’ll be hearing about this Libor scandal for years and years, once we get through all of the lawsuits.