Bribery and rate-rigging took place at Royal Bank of Scotland even after it was bailed out by the taxpayer, regulators revealed yesterday, as they fined the banking giant £391m (€453m).
Stephen Hester, chief executive of RBS, said he would stay to “finish the job” at the bank despite damning evidence from US and UK authorities over the bank’s role in the Libor scandal.
RBS, which is 81% owned by the British government, will recoup about £300m from staff bonuses and clawing back previous awards to pay for the fines. RBS owns Ulster Bank.
While Hester and chairman Philip Hampton have been spared the axe, investment banking boss John Hourican will step down, forfeiting about £9m in bonuses and long-term incentive shares.
George Osborne, the British finance minister, condemned the “totally unacceptable” behaviour at RBS and said it was right that the “banks, not the taxpayers, will pick up the bill”.
RBS said 21 staff were involved in attempting to manipulate interbank lending rates — specifically Japanese yen and Swiss franc libor submissions — from 2006 to as recently as Nov 2010.
All 21 have left or been subject to disciplinary action, and two managers with supervisory responsibilities have stepped down. Six have been dismissed, including two managers, while six have been severely disciplined or are going through a disciplinary process.
Another eight left before disciplinary action could be taken and one was dismissed for misconduct not related to these findings.
All staff that have left as a result of the investigation received no bonus for 2012 and saw full claw-back of any outstanding past awards.
Evidence from regulators revealed yet more shocking exchanges between traders, with the US Commodity Futures Trading Commission revealing one saying: “It’s just amazing how libor fixing can make you that much money.”
Under its settlement, RBS will pay £87.5m to the FSA, $325m (€240m) to the commission, and $150m to the US department of justice.
The bank has also agreed a deferred prosecution agreement with the US department of justice — a deal that could see it face tough sanctions if it commits any form of criminal offence during the period — while its Japanese arm has pleaded guilty to wire fraud.
General Breuer, department assistant attorney, said: “These are extraordinary results, and our investigation is far from finished. Our message is clear: no financial institution is above the law.”
In what will come as a blow to Hester, the commission slammed RBS for failing to enforce any “meaningful” controls surrounding libor submission until Jun 2011.
RBS stressed that Hourican had no involvement in or knowledge of the libor misconduct.
However, it said both he and the board felt it was right in view of the “management issues identified in relation to this settlement and the impact on the group’s reputation”.
Hourican leaves RBS with 12 months’ pay worth £775,000.
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