October 23, 2013 / 11:37 AM / 4 years ago

Dutch Rabobank braces for second-largest fine over Libor scandal

AMSTERDAM, Oct 23 (Reuters) - Rabobank may face a fine of roughly $1.0 billion over its alleged role in the manipulation of benchmark interest rates, the second-biggest penalty in a global investigation.

Sources familiar with negotiations between the bank and U.S., UK and Dutch authorities said a final agreement on the size of the fifth Libor-related penalty had yet to be reached, although a deal is expected within two weeks.

One source said the level of the fine being discussed was around $1.0 billion.

“Negotiations are ongoing,” the source said.

Rabobank, Britain’s Financial Conduct Authority, the Dutch central bank and the U.S. Commodity Futures Trading Commission declined to comment. The U.S. Department of Justice did not immediately respond to a request for comment.

U.S. and British authorities have already fined Barclays , UBS, RBS and broker ICAP around $2.7 billion over the manipulation of benchmark interest rates such as Libor (London interbank offered rate), which underpins more than $300 trillion of financial products.

Seven men have also been charged with fraud-related offences in an inquiry that has become a symbol for the industry’s greed.

Swiss bank UBS has faced the largest penalty to date. It was ordered to pay $1.5 billion last December and two of its former traders, Tom Hayes and Roger Darin, have been charged with taking part in an alleged multi-year scheme to rig rates.

Hayes, who allegedly conspired with employees from more than 10 financial institutions including Rabobank, and two former brokers from RP Martin are the first to face trial in Britain.

Two former Rabobank traders were suspended from Mitsubishi UFJ Financial Group in 2012 after an internal investigation into the manipulation of interbank lending rates.

Rabobank, which once focused on lending to farmers, has been culling branches and jobs to trim costs. In October, it abolished bonuses for its executive board members amid a public outcry over bankers’ pay.

Rabobank has been among a handful of peers sued by private individuals and in class action civil suits in the United States, alleging it rigged dollar Libor, Euribor, Japanese Yen Libor as well as the Tokyo Interbank Offered Rate (Tibor).

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