September 26, 2012 / 8:32 AM / 5 years ago

Former RBS trader saw Libor fixing as 'cartel' -report

SINGAPORE, Sept 26 (Reuters) - A former trader for the Royal Bank of Scotland discussed Libor fixing with traders from other banks and described the process -- now subject to regulatory investigations worldwide -- as a cartel, according to court documents cited by Bloomberg.

In transcripts of instant messaging conversations that have now been sealed from public view, Tan Chi Min, the former head of delta trading at the British lender, discussed the setting of the London interbank offered rate (Libor) with colleagues inside and outside the bank.

"It's just amazing how Libor fixing can make you that much money or lose if opposite," Tan said, according to Bloomberg, in an electronic messaging conversation on Aug. 19, 2007, with traders at other banks, including a trader from Deutsche Bank called Mark Wong.

"It's a cartel now in London," he added.

More than a dozen banks are under investigation by regulators in the United States, Europe and Asia for suspected rigging of interbank rates used to price trillions of dollars worth of financial products.

Tan was fired from RBS during an internal probe into alleged manipulation of Libor rates.

The electronic conversation was among message exchanges included in a 231-page affidavit, filed by Tan, that Singapore High Court has sealed following a request from RBS.

The British lender asked that the documents be sealed until the investigations by the U.S. Commodity Futures Trading Commission, the Department of Justice and Britain's Financial Services Authority are completed.

Tan, who was known at the bank as Jimmy Tan, was sacked from his Singapore-based role as head of delta trading for the Global Banking & Markets division in November 2011. The bank accused him of trying to improperly influence the bank's rate setters. Delta trading involves using derivatives to mirror the price moves in a basket of securities.

He is suing the bank for wrongful dismissal, and has alleged that the practice of traders making requests to the bank's rate setters was well known by RBS management.

RBS is disputing the allegations, saying Tan was dismissed for gross misconduct. It has already announced that it has dismissed several employees in relation to its inquiries into its interbank rate setting.

RBS's spokeswoman in Singapore, Patricia Choo, said the bank had no further comment to make on the case.

Deutsche Bank AG spokesman Michael West in Hong Kong referred to previous statements by the bank that it is continuing its investigation into the matter and cooperating with the authorities. He added that Wong had no comment to make.

The Bloomberg report also contains conversations in which Tan discusses with colleagues how the bank's rate submission had affected the final rate.

"Nice Libor," Tan said in an April 2, 2008, instant message with other RBS traders.

"Our six-month fixing moved the entire fixing, hahahah."

RBS confirmed last month in its half-year results that it was among banks being investigated. In June, rival lender Barclays Plc was fined $453 million by U.S. and British authorities after its staff reported false interbank rates.

The case is Tan Chi Min vs The Royal Bank of Scotland PLC, S939/2011 at Singapore High Court.

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