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Last updated: April 11, 2013 7:01 pm
The head of Royal Bank of Scotland’s Japanese securities business is set to step down as regulators there move to sanction the UK-based lender in connection with the manipulation of benchmark interest rates.
Ryusuke Otani, chief executive of RBS Securities Japan, is expected to announce his resignation this week, people close to the situation said.
The move comes as the Japanese Financial Services Authority prepares to level a penalty on RBS over the Libor manipulation scandal and breaches of regulatory rules separating trading operations from retail banking.
The watchdog was asked by the country’s Securities and Exchange Surveillance Commission earlier this month to take “administrative action” against RBS SJ. An announcement could come as early as this week.
The British lender agreed in February to pay £390m to US and UK authorities for the manipulation of benchmark interest rates in a deal that saw RBS’s Japanese unit admitting to wire fraud.
RBS would be the third international bank to be punished by the Japanese FSA for the manipulation of yen Libor. Two years ago, Swiss bank UBS and US rival Citigroup were forced to suspend trading of certain derivatives for one week and two weeks respectively.
The scandal has since widened into one that spans three continents and involves probes against more than a dozen financial services groups for possible manipulation not only of the London Interbank Offered Rate but also similar rates set in Brussels, Tokyo and Singapore, as well as ISDAfix, a benchmark for interest rate swaps.
In RBS’s case, observers say the most likely sanction is a “business improvement order” that forces it to make changes in compliance and other areas rather than a trading ban. RBS declined to comment.
The SESC said last week that from mid-2006 until early 2010, an unidentified trader and his colleagues at RBS SJ had continuously approached yen Libor submitters to change their submissions in favour of their trades in what the commission called “seriously unjust and malicious” conduct.
It added that the RBS SJ internal control system had “serious deficiencies” as it had “failed to identify these misconducts for a long period of time and has not taken any appropriate measures”.
The imminent departure of Mr Otani comes one day after it emerged that the lender had dismissed another, London-based, trader.
Simon Green, a derivatives trader who specialised in short-term dollar and euro interest rates, left last month, people close to the situation said. Mr Otani and Mr Green could not be reached for comment.
Separately, it emerged on Thursday that Lloyds Banking Group is probing the roles of two employees over their alleged involvement in manipulating interbank lending rates.
One individual is currently suspended from their duties at the bank while the other is understood to have already left Lloyds but not in connection with the bank’s investigations into the affair.
Two previously suspended traders are also understood to be back at work.
“As with many others in the sector, the group is assisting various regulators in their ongoing investigations into the setting of Libor,” a spokesperson for the bank said. “Until these investigations are completed, it would be inappropriate for us to comment any further.”
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