Rabobank Groep, the Netherlands’ biggest mortgage lender, will pay about $1 billion to resolve regulators’ claims that it tried to manipulate benchmark interest rates, two people with knowledge of the matter said.
The settlement, which could be announced as soon as next week, will resolve complaints from the U.S. Commodity Futures Trading Commission and Justice Department, the U.K.’s Financial Conduct Authority and Dutch regulators, said the people, who asked not to be identified because the agreement isn’t public.
Rabobank would join financial firms including Barclays Plc and Royal Bank of Scotland Group Plc that have paid a total of about $2.6 billion in penalties over accusations that traders attempted to rig the London interbank offered rate. In December, UBS AG reached a $1.5 billion settlement, the largest to stem from the investigation, with authorities in the U.S., U.K. and Switzerland. Rabobank’s penalty would be the second-biggest.
“The fine is huge -- about three times the size of fines leveled against U.K. banks caught fiddling the rate,” Andre Spicer, a professor of organizational behavior at Cass Business School in London, said in an e-mail. “This is a sign regulators around the world are no longer toothless tigers.”
Rabobank’s pact would resolve claims related to attempts to manipulate a benchmark rate for Japanese yen, one of the people said. The settlement was delayed because of the U.S. government shutdown this month that limited support staff available to work on the deal, according to the one of the people.
Regulators around the world are examining alleged abuses of financial benchmarks by companies that play a central role in setting them. European regulators are reviewing accusations of collusion in crude oil and biofuels markets, while the U.S. CFTC and Britain’s FCA are probing the potential manipulation of ISDAfix, a benchmark for interest-rate swaps.
For Rabobank, it would be its largest penalty so far. The firm, a co-operative bank formed in 1898 to lend to Dutch farmers, was fined 150,000 euros ($206,460) in 2010 after Dutch financial-markets regulator AFM found flaws in its interpretation of the rules for home lending advice. The company is the only one of the four biggest Dutch banks that hasn’t needed state aid.
Last week, it announced it’s abolishing variable compensation for executive board members, after not granting bonuses in 2012 and 2013, responding to “widely held public views regarding bank executives’ pay,” Supervisory Board Chairman Wout Dekker said in a statement.
Peter Carr, a Justice Department spokesman, said in an e-mailed statement that it “has an active, ongoing investigation into possible manipulation of Libor and other international benchmark rates.” He declined to comment on Rabobank.
“The Libor case will be completed within the foreseeable future,” said Ben Feiertag, a spokesman for the Dutch central bank, declining to comment further. Stewart Todd, a spokesman for the FCA and Steve Adamske, the CFTC’s spokesman, declined to comment.
Authorities’ investigations into Rabobank’s role in the Libor and Euribor setting process are almost completed and settlements may be reached within two weeks, the Utrecht, Netherlands-based lender said in a statement today. The company said it couldn’t comment on possible amounts.
The accord was reported yesterday by the Financial Times.
UBS’s Libor fines included $1.2 billion paid to the Justice Department and CFTC, and 160 million pounds ($260 million) to U.K. regulators. The Zurich-based firm also was forced to disgorge 59 million francs ($66 million) in estimated profits to the Swiss Financial Market Supervisory Authority.
RBS, based in Edinburgh, was fined $612 million by U.K. and U.S regulators on Feb. 6 for making hundreds of attempts to rig rates including yen, Swiss franc and U.S. dollar Libor from 2006 to 2010. London-based Barclays paid a 290 million-pound fine to U.K. authorities over Libor-rigging accusations. ICAP Plc, the world’s largest broker of transactions between banks, was fined $88 million last month.
Rabobank, the only Dutch contributor to Libor, said in August it took a provision to settle the probes. It didn’t elaborate on the size, saying that “could seriously prejudice its position.”
First-half net income dropped 14 percent to 1.11 billion euros from a year earlier, hurt by the charge and impaired land prices, Rabobank said in August.
The bank has received subpoenas and information requests from regulatory agencies and competition and criminal authorities in Europe, Asia and North America, including the Netherlands, the U.K., U.S. and Japan, it said in August. Rabobank was at “various times a member of eight Libor panels and the Euribor panel,” it said.