Rabobank to be slapped with Libor rigging fine

DUTCH co-operative Rabobank will likely face a whopping fine of roughly $1 billion (£619 million) for its role in rigging key benchmark interest rates, the second-largest penalty to be doled out as part of the global investigation into the scandal.

The exact size of the fine will probably be confirmed within the next two weeks, but will be substantially larger than previously expected. Andre Spicer, professor of organisational behaviour at Cass Business School, said regulators seemed to be ramping up penalties.

“The fine is huge – about three times the size of fines levelled against UK banks caught fiddling the rate,” Spicer said. “This is a sign regulators are no longer toothless tigers.”

Rabobank is reaching a final agreement with the UK’s Financial Conduct Authority, the US Commodity Futures Trading Commission and Dutch central banking authorities. It is being investigated for potential manipulation of Libor – the London interbank rate that underpins more than $300 trillion of financial products – and its Brussels equivalent, Euribor.

Three banks and one brokerage firm have so far reached a settlement on rate-rigging charges, with UBS paying a record fine of $1.5bn last year. Barclays paid £290m last year, Royal Bank of Scotland paid £390m earlier this year, and broker Icap paid £55m last month.

Rabobank has suspended several employees and is paying the legal fees of at least two involved in the Libor investigations.

Seven individuals to date from across the industry have been charged with fraud-related offences, including former UBS trader Tom Hayes. Hayes – who allegedly conspired with staff from more than ten institutions including Rabobank – has become the first banker to go to court to face criminal charges.