RBS is likely to end up paying a whopping £400m fine to the US and UK authorities as settlement amount for its involvement in the Libor rigging scandal. Apart from the monetary cough-up, RBS will also sign a two-year deferred prosecution agreement with the US Department of Justice (DoJ). The deferred prosecution agreement is similar to probation wherein if RBS commits any form of criminal offence during the two-year period, it could have grave consequences for the bank’s ability to operate in the US.
Under the Libor scandal settlement deal, RBS’s Japanese subsidiary will plead guilty before Financial Services Authority (FSA), the DoJ and the Commodity Futures Trading Commission (CFTC), to a criminal charge, resulting in a fine of approximately $50m (£32m) for the Japanese business. The RBS Libor settlement is expected to announce that the RBS Libor manipulation mainly involved Yen and Swiss Franc currency Libor and the UK customers were not subjected to its fraud.
Sources close to the settlement procedure divulged that the settlement documents would include lurid emails and nstant messages sent by RBS traders, involved in the Libor manipulation. In the regard, RBS is said to disclose that 21 of its staff members were either sacked or been disciplined as a result of Libor-related misconduct.
It may be noted that the FSA and the US authorities had uncovered evidence of ‘book bias’, where traders had allegedly manipulated rates to inflate profits and therefore their bonuses. John Hourican, a senior executive is the scapegoat that the bank has found to appease public anger over the Libor-rigging scandal. John Hourican will step down with a minimum pay-out in the light of the Libor scandal settlement.