Rabobank Nederland had its outlook lowered by Standard & Poor’s after the biggest Dutch mortgage lender was fined 774 million euros ($1 billion) for its involvement in rigging benchmark interest rates.
S&P revised its outlook on the long-term ratings of the company, the debt-issuing entity of Rabobank Groep, to negative from stable, while affirming the AA-/A-1+ counterparty credit ratings, according to a statement today.
Rabobank, a co-operative formed in 1898 to lend to Dutch farmers, on Oct. 29 received the second-highest fine from regulators in the U.S., the U.K. and the Netherlands over manipulation of the London interbank offered rate and Euribor. The London-based Financial Conduct Authority said the misbehavior was “serious, prolonged and widespread.” The firm’s chairman, Piet Moerland, stepped down months earlier than planned.
“The outlook revision reflects the possibility that we could revise our favorable assessments of the bank’s business and risk positions due to the findings of the interbank offered rates investigations, and its exposure to the still-difficult domestic credit environment,” the rating company said.
The fines make Utrecht, Netherlands-based Rabobank the fifth firm penalized over manipulation of the London interbank offered rate. Global investigations into banks’ attempts to manipulate the benchmarks for profit have also led to $2.6 billion in fines and settlements for Barclays Plc (BARC), Royal Bank of Scotland Group Plc, UBS AG (UBSN) and ICAP Plc.
Rabobank Groep is formed of independent local lenders that form its cooperative and an “umbrella organization” made up of Rabobank Nederland and its subsidiaries and associates, according to its annual report. The lender maintained a top credit rating at S&P until November 2011, when the rating company revised criteria for dozens of banks and Rabobank Nederland was lowered to AA from AAA. A next cut, to AA-, took place last November as the Dutch and euro-area economy slumped.
Moody’s Investors Service reduced Rabobank Nederland to Aa2 from Aaa in June 2012. Moody’s said last week the settlement announcement had no impact on its ratings or outlook on Rabobank Nederland, while noting “such shortcomings were unexpected at Rabobank whose reputation as a bank with a strong risk and control culture has been somewhat tarnished.”
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