Rabobank of the Netherlands has agreed to pay about US$1 billion to settle US, British and Dutch charges of manipulating a key global interest rate. The bank’s chairman resigned as it became the fifth financial firm sanctioned in the global rate-rigging scandal.
The amount Rabobank is paying includes US$325 million in an agreement with the US Department of Justice that allows the bank to avoid criminal prosecution in exchange for its continued cooperation in the investigation of major banks’ conduct regarding the London interbank offered rate, or LIBOR.
The authorities said on Tuesday that Rabobank, one of the world’s largest banks, engaged in rigging of the LIBOR from 2005 to 2011.
Rabobank also announced that Piet Moerland has resigned as chairman of the executive board, effective immediately.
“On behalf of the bank and the executive board I want to send a very clear signal: a sincere apology and strong condemnation of these inappropriate acts,” Moerland said in a statement. “I have decided to resign.”
The LIBOR affects trillions of US dollars in contracts around the world, including mortgages, bonds and consumer loans. A British banking trade group sets the rate daily after more than a dozen big banks submit estimates of their borrowing costs.
Britain’s Barclays and Royal Bank of Scotland (RBS), Swiss bank UBS and British brokerage ICAP have paid a total of about US$2.6 billion to settle charges of rigging the LIBOR.
Dutch Finance Minister Jeroen Dijsselbloem said the Libor scandal “has once again damaged the confidence of citizens and bank customers.”
Moerland’s resignation was “the most powerful signal possible from the Rabobank board that this is unacceptable and they accept the consequences,” Dijsselbloem told reporters.
The process of setting the LIBOR came under scrutiny after Barclays admitted in June last year that it had submitted false information to keep the rate low. Barclays agreed to pay a US$453 million fine, and its CEO and chairman both resigned afterward.
In addition to Rabobank, Barclays, UBS and RBS, other banks that set the LIBOR are Citigroup Inc, JPMorgan Chase & Co, Bank of America, HSBC, Lloyds Bank, Societe Generale, BNP Paribas, Credit Agricole, Credit Suisse, Deutsche Bank, Royal Bank of Canada, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Bank and Norinchukin Bank.