RBS to settle Libor, Nomura insider trading

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.