US fines Scottish bank for LIBOR rigging

WASHINGTON - The US federal government announced on Wednesday that it has ordered the Royal Bank of Scotland PLC and RBS Securities Japan Limited (collectively RBS) to pay sizable monetary penalties for LIBOR rigging.

The orders from the US Commodity Futures Trading Commission ( CFTC) and the Department of Justice (DOJ) found that from at least 2006 to 2010, RBS made hundreds of attempts and at times succeeded to manipulate Yen and Swiss Franc LIBOR, which are benchmark interest rates critical to financial markets and the public. They also alleged that RBS made false LIBOR reporting to benefit its derivatives and money market trading positions.

"Such false reporting of benchmark rates undermines the integrity of markets and shakes the public's trust in our financial system," said CFTC Chairman Gary Gensler in a statement.

Together the CFTC and the DOJ ordered RBS to pay 475 million U. S. dollars in penalties, cease and desist from further violations, and take steps to ensure the reliability of LIBOR. In addition, RBS had to pay 137 million dollars to the U.K. Financial Services Authority.

As a result, the cross-Atlantic actions brought the overall penalties to about 612 million dollars.

LIBOR, published by the British Bankers' Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency, of which RBS was a member from at least 2006 to 2010.

Besides RBS, Barclays and UBS also paid a considerable amount of money to reach settlements over LIBOR rigging.