Rabobank is set to face a fine of almost $1bn for the alleged manipulation of Libor and other benchmark interbank lending rates as early as next week as regulators continue to punish the architects of a scandal that has shaken trust in the financial system.

The Dutch lender’s likely penalty, confirmed by three people familiar with the situation, is set to be larger than had been expected and would be the second biggest paid by a financial institution in the rate-rigging scandal.

Three banks and one brokerage firm have so far reached a settlement on charges that they helped manipulate Libor and other interbank lending rates widely used as references for a range of financial products across the globe.

UBS late last year paid a record fine of $1.5bn, while the interdealer broker Icap last month paid £55m. Barclays paid £290m last year and Royal Bank of Scotland paid £390m earlier this year.

Lawyers said an unexpectedly large penalty for Rabobank would worry other banks embroiled in the scandal that had yet to settle with regulators. “This is quite concerning,” said one. “It would seem to suggest a scaling up of the penalties.”

Rabobank’s settlement is set to be with US and UK authorities as well as De Nederlandsche Bank, the Dutch central bank, although the latter is not expected to impose a substantial portion of the fine.

Paul Robson, a former money-market manager at Rabobank’s London office, who left the bank in 2009, was warned by Department of Justice that he may face criminal charges, a person familiar with the matter said. The person said no final decision has been made.

Steven Francis, a partner at Reynolds Porter Chamberlain, who is advising Mr Robson, said: “It’s our very firm belief that the DoJ has not made any charging decision at all.” He declined to comment further.

Rabobank and all the regulators involved declined to comment.

Rabobank, a co-operative founded in the late 19th century as a farmers’ bank, braced itself for a Libor settlement earlier this year by making legal provisions which dragged down its profits in the first half. The bank, which last week abolished bonuses for almost all its staff including its executive board, has suspended several employees and continues to pay the legal fees of at least two individuals embroiled in the Libor investigations.

It has publicly disclosed that it is being investigated for potential manipulation of various Libor rates as well as Euribor, the Brussels equivalent.

The settlement was initially expected to be finalised earlier this month but it was held up because US regulators were short-staffed amid the country’s temporary government shutdown.

Mr Robson was last year identified as being under investigation after Bank of Tokyo Mitsubishi said it had suspended him over conduct unrelated to his employment at Mitsubishi.

Mr Robson was also reported this week to have been cited as an alleged co-conspirator on a draft indictment against Tom Hayes, a former star trader at UBS and Citigroup. Mr Hayes has become the first banker to go to court to face criminal charges for Libor manipulation.

The draft indictment by the UK’s Serious Fraud Office was amended after the authority moved to omit any reference to Mr Robson and others, and to narrow the charges against Mr Hayes, who is accused of eight counts of conspiracy to defraud.

Additional reporting by Patrick Jenkins

Get alerts on Financial & markets regulation when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article