Labour MP claims Libor fine will be worse for RBS

John Mann, a member of the Treasury select committee, reckons RBS is in for an even bigger fine than Barclays over the Libor fixing scandal. Ouch!

by Michael Northcott
Last Updated: 19 Aug 2013

If you thought Barclays had paid a dear price for its part in the Libor rigging scandal (a £290m fine and the departure of several senior executives), think again. The authorities are planning to come down even harder on RBS over the rate-fixing fiasco. That’s according to John Mann, a Labour MP and member of the Treasury select committee. He claimed this morning that ‘City insiders’ had told him RBS would have to pay a much bigger fine to settle investigations into Libor fixing, and that the government already knew what kind of figure was on the cards.

It is alleged that several major banks are guilty of attempting to manipulate the interest rates at which banks lend to each other, in order to improve their trading positions artificially. Last month, heads rolled at Barclays following the payout to UK and US authorities, as its senior staff were grilled by the Treasury select committee on live television. Former CEO Bob Diamond, former chairman Marcus Agius, and former COO Jerry del Missier have all lost their jobs over the scandal.

So with RBS now facing similar wrath, this sounds like another naughty bank is getting its just desserts. The only thing is, the UK taxpayer owns 82% of RBS, meaning that the fines will effectively come out of the government coffers. John Mann hasn’t missed this point, and said: ‘There is an obvious Government advantage in allowing Barclays to take the full flak and letting RBS sneak in later.’ He’s probably right. Public ire already peaked with Barclays, so perhaps the second round will be more subdued.

RBS chief Stephen Hester knows things could get messy though. Last month he said the bank would ‘have [its] day in the spotlight’ over Libor, admitting that it is ‘one of the banks tied up’ in the scandal. Things already smell a bit dodgy after one of the bank’s former traders in Singapore, who claims the bank routinely manipulated Libor submissions, was dismissed last November. He is not the only trader claiming that the practice was rife…

Mann is stoking the political fire however, calling for chancellor George Osborne to reveal if he knows anything about rate-fixing at RBS, who he was told by, and what action he has taken as a result. With RBS practically state-owned, Osborne has done well to keep his nose clean since the scandal blew up…

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