RBS to set­tle Li­bor, No­mura in­sider trad­ing

The Pak Banker - - Front Page -

LON­DON

Royal Bank of Scot­land Group Plc, Bri­tain’s big­gest tax­payer-owned lender, said it ex­pects to pay a fine in the com­ing months to set­tle reg­u­la­tors’ probes into al­le­ga­tions the lender tried to ma­nip­u­late Li­bor. Whether the penalty ex­ceeds the record 290 mil­lion pounds ($467 mil­lion) Bar­clays Plc paid in June or not “it will still be a mis­er­able day in RBS’s his­tory,” Chief Ex­ec­u­tive Of­fi­cer Stephen Hester told re­porters on a call Nov. 2 as the bank posted third-quar­ter oper­at­ing profit that beat an­a­lyst es­ti­mates.

RBS is one of more than a dozen banks world­wide fac­ing reg­u­la­tory probes into al­le­ga­tions that they ma­nip­u­lated the Lon­don in­ter­bank of­fered rate, the bench­mark for more than $300 tril­lion of se­cu­ri­ties. The Ed­in­burgh-based lender has fired at least four traders fol­low­ing an in­ter­nal probe, and last month sus­pended its head of rates trad­ing for Europe and the Asia- Pa­cific re­gion, the first se­nior man­ager to be put on leave. Li­bor is the big­gest reg­u­la­tory ob­sta­cle to over­shadow Hester’s at­tempts to over­haul the com­pany af­ter it re­ceived the big­gest bank­ing bailout in his­tory in 2008. RBS said Nov. 2 it would set aside a fur­ther 400 mil­lion pounds to com­pen­sate clients wrongly sold loan in­sur­ance and de­riv­a­tives, bring­ing the to­tal the bank has ear­marked to 1.7 bil­lion pounds.

A No­mura em­ployee tipped off staff from Ja­pan Ad­vi­sory Ltd., a hedge fund ad­vi­sory firm, about a share sale it man­aged for Elp­ida Mem­ory Inc. in 2011, an of­fi­cial from the Se­cu­ri­ties and Ex­change Sur­veil­lance Com­mis­sion said at a news briefing Nov. 2, speak­ing anony­mously in ac­cor­dance with the agency’s pol­icy. No­mura has been em­broiled in four of six cases un­veiled this year as au­thor­i­ties crack down on trad­ing based on tips pro­vided by un­der­writ­ers about clients’ eq­uity of­fer­ings. The lat­est reve­la­tions un­der­score the task Chief Ex­ec­u­tive Of­fi­cer Koji Na­gai faces in prov­ing to in­vestors that in­ter­nal con­trols have been tight­ened af­ter the scan­dal cost it in­vest­ment bank­ing man­dates and prompted his pre­de­ces­sor to re­sign. The SESC’s find­ings were helped by an in­ter­nal probe con­ducted by Toky­obased No­mura, the of­fi­cial said. “Dur­ing one of our vol­un­tary in­ves­ti­ga­tions we learned of cir­cum­stances with a strong pos­si­bil­ity of be­ing re­lated to this in­ci­dent and we re­ported our find­ings to the com­mis­sion,” No­mura said in a state­ment Nov. 2. “No­mura has im­ple­mented a se­ries of im­prove­ment mea­sures and has con­tin­ued to con­duct vol­un­tary in­spec­tions and in­ves­ti­ga­tions in re­la­tion to in­ter­nal con­trols for cor­po­rate- re­lated in­for­ma­tion,” the bank said in the state­ment. Bank­rupt Ir­ish busi­ness­man Sean Quinn, once the coun­try’s rich­est man, was sen­tenced to nine weeks in jail by a Dublin court. Judge El­iz­a­beth Dunne made the rul­ing in Dublin Nov. 2 af­ter a con­tempt-of-court hear­ing re­lated to ef­forts to move some of his fam­ily’s prop­erty be­yond the grasp of Ir­ish Bank Res­o­lu­tion Corp., for­merly known as An­glo Ir­ish Bank Corp. Quinn be­gan serv­ing his sen­tence while pur­su­ing an ap­peal in the Supreme Court, his lawyer Eu­gene Grant said.

“It is not dis­puted that sig­nif­i­cant as­sets worth mil­lions of eu­ros have been put be­yond the reach of the bank,” the judge said Nov. 2. Mov­ing the as­sets is “noth­ing short of out­ra­geous — it is a se­ri­ous con­tempt of court.” Quinn gave his back­ing to ef­forts of plac­ing as­sets out­side the reach of na­tion­al­ized IBRC, Dunne said, a mat­ter for which she found him, his son, who is also named Sean, and his nephew Peter Dar­ragh Quinn in con­tempt in June. Based on the ev­i­dence, Dunne said she had no choice but to sen­tence the elder Quinn to prison, even af­ter tak­ing his char­i­ta­ble work and med­i­cal con­di­tion into ac­count.

The for­mer ce­ment-to-in­sur­ance em­pire ty­coon was de­clared bank­rupt in Jan­uary, two months af­ter a court ruled Quinn owed IBRC 2.16 bil­lion eu­ros ($2.78 bil­lion). Quinn was worth about $6 bil­lion in 2008, ac­cord­ing to Forbes mag­a­zine.

Quinn said he wanted to “get on” with his prison term be­fore be­ing taken into cus­tody. “I did stupid things,” Quinn told re­porters, say­ing that IBRC “took my com­pa­nies, my rep­u­ta­tion and they put me in jail.” Nadir, who built Polly Peck from a textile com­pany in Lon­don’s East End to a FTSE 100 firm, must pay within two years or he will face an­other 72 months in prison, Judge Ti­mothy Hol­royde ruled Nov. 2, ac­cord­ing to David Jones, a spokesman for the Se­ri­ous Fraud Of­fice, which pros­e­cuted the case.

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