C and JPM Next -As Unit Pleads Guilty, R.B.S. Pays $612 Million Over Rate Rigging
The broader rate-rigging case has centered on how much the Royal Bank of Scotland and a dozen other banks, including Citigroup and HSBC, charge each other for loans. Such benchmarks, including Libor, help determine the borrowing costs for trillions of dollars in financial products like corporate loans, mortgages and credit cards.
While foreign banks have received the brunt of the scrutiny to date, an American institution could be among the next to settle. Citigroup and JPMorgan Chase are under investigation.
The Royal Bank of Scotland case represents the second-largest fine levied in the multiyear investigation into rate manipulation.
The Justice Department imposed a $150 million fine as part of a deferred-prosecution agreement with R.B.S., while the trading commission’s financial penalty reached $325 million. The Financial Services Authority, the British regulator, also levied a £87.5 million ($137 million) fine against the firm, one of the largest financial penalties ever from British authorities.
R.B.S., based in Edinburgh, had aimed to avert the guilty plea for its Japanese subsidiary. But the Justice Department’s criminal division declined to back down, and the bank had little leverage to push back. If it had balked at a plea deal, the Justice Department could have moved to indict the subsidiary.
“Like with Barclays and UBS, the settlement with R.B.S. is much more than a slap on the wrist,” said Bart Chilton, a commissioner at the trading commission who is a critic of soft fines on big banks.
In the wake of the settlement, Royal Bank of Scotland is shaking up its management team as it moves to repair its bruised image. John Hourican, the firm’s investment banking chief, resigned on Wednesday, and agreed to forgo some of his past compensation.