RBS Managers Condoned Libor Manipulation

Bank’s traders, managers routinely sought to influence Libor submissions from 2007 to 2010.

Royal Bank of Scotland Group Plc managers condoned and participated in the manipulation of global interest rates, indicating that wrongdoing extended beyond the four traders the bank has fired.

In an instant-message conversation in late 2007, Jezri Mohideen, then the bank’s head of yen products in Singapore, instructed colleagues in the U.K. to lower RBS’s submission to the London interbank offered rate that day, according to two people with knowledge of the discussion. No reason was given in the message as to why he wanted a lower bid. The rate-setter agreed, submitting the number Mohideen sought, the people said.

Rate-Setting

The process of setting rates was open to abuse because RBS failed to establish guidelines until June 2011, four people familiar with the business said. Managers encouraged rate-setters to discuss Libor with traders across the company as a way of ensuring the bank’s submissions reflected market conditions, particularly after money markets froze in 2007, the people said. These communications -- by e-mail, instant messages and telephone -- are the focus of regulators’ probes.

Mohideen Denial

Mohideen, who joined RBS in 2006, was put in charge of rates trading for Europe and the Asia-Pacific region in 2010. In January, he welcomed an award presented by Risk magazine naming RBS as the top provider of inflation derivatives as a “great endorsement” for the unit, which allows customers to speculate on consumer-price indexes, according to a statement from the bank. He also sits on the global rates board of the Association for Financial Markets, a London lobbying group.

Goodwin Expansion

The alleged manipulation followed an expansion at RBS under Goodwin, Chairman Tom McKillop and Johnny Cameron, chairman of the investment bank. The company’s balance sheet ballooned to 2.4 trillion pounds in 2008 from 369 billion pounds in 2001, Goodwin’s first full year as CEO.

Senior Managers

Tan also named Mohideen in his lawsuit as one of the managers who sought to influence RBS’s yen Libor submissions. Other managers who acted in the same way, according to Tan’s suit, include Robert Brennan, now Singapore-based head of treasury markets for Asia, and Kevin Liddy, the London-based global head of short-term interest-rate trading.

Interbank Conspiracy

Employees at RBS, HSBC Holdings Plc, JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG, as well as interdealer brokers ICAP Plc and RP Martin Holdings Ltd. were involved in the conspiracy, the Canadian regulator said. Spokesmen for the firms declined to comment on the suit. Greg Scott, a spokesman for the Competition Bureau, wouldn’t comment about Hayes.

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