The Royal Bank of Scotland has taken its most drastic action so far against traders involved in the LIBOR rigging scandal by suspending the most senior figure to date. The suspension of Jezri Mohideen, the head of rates for Europe and Asia Pacific, has come at a time when talk of huge fines for the Edinburgh-based bank. It is claimed Mr Mohideen instructed other traders to lower the submission of the LIBOR rate to strengthen the banks position in respective markets.
The most high-ranking staff member so far to become embroiled in the scandal which is sweeping the banking industry was considered by many as a high-flyer in the banking world and had been promoted to the head of rates for Europe and Asia back in 2010. The allegations stem from his previous role as head of Yen products in Tokyo.
In an instant-message conversation recorded in 2007, two colleagues have alleged that Mohideen, instructed colleagues in the U.K. to lower RBS’s submission to yen Libor that day. So far no comment has been made by Mr Mohideen or RBS in relation to the suspension and the only comment made by a bank spokesman said: “Our investigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing. RBS and its employees continue to cooperate fully with regulators“. The suspension of Mr Mohideen could be the start of a more companywide witch-hunt for individuals who took part in the LIBOR-rigging scandal.
This follows the suspension of 7 other traders late last year, two of which have recently been re-instated by the bank and another Tan Chi Min – also known as Jimmy Tan- is suing the bank for wrongful dismissal. He claims the rate rigging was “systemic” in the bank, a claim that has been re-iterated by inside sources in recent months.
With Barclays Plc, Britain’s second-biggest lender by assets, paying a record £290 million ($466 million) fine in June it is expected RBS, 81% owned by the UK taxpayer, could exceed that amount for its involvement and many other banks are facing investigation.
This comes at a difficult time for RBS as shares fell 1% amid warnings from analysts that the bank would need to cut the price of the 316 branches it was planning to sell to Santander for £1.6bn.The sale, forced on RBS by Brussels as a result of the £45bn taxpayer bailout, fell through on Friday after more than two years of negotiations. The sale may now have to be completed at a cut-price £0.5bn- £1bn less than the deal agreed with Santander back in 2010.