John Fitzsimons, 06 February 2013
Royal Bank of Scotland (RBS) has been fined £390 million for its attempts at manipulating the London Interbank Offered Rate (LIBOR).
LIBOR is essentially the rate at which banks lend money to each other. Every day banks are required to submit their interbank borrowing rates confidentially to Thomson Reuters, which then works out LIBOR on behalf of the British Bankers’ Association. For more on LIBOR and why it matters, check out What is Libor?
An FSA investigation found that over a four year period between January 2006 and November 2010 employees of RBS engaged in all sorts of activities that would lead to incorrect LIBOR submissions. By lying about what its real interest rates were, RBS was in a position to manipulate the market, allowing its traders to cash in.
The FSA’s investigation found at least 219 documented requests for inappropriate submissions, with 21 individuals involved identified.