Rabobank said to avoid EU Libor fine after collusion bids

Staff Writer
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(c) 2013, Bloomberg News.

BRUSSELS — Rabobank Groep, the Netherlands lender fined 774 million euros ($1.04 billion) by U.S., British and Dutch regulators for rigging interbank lending rates, will escape a European Union antitrust fine this year, two people familiar with the probe said.

Rabobank isn't among a group of lenders settling a case over manipulation of yen Libor and will avoid punishment at this stage, said the people, who asked not to be identified because the EU's decision isn't yet public. More than half a dozen banks are set to be fined as part of a settlement with the EU in the yen Libor case, one of the people said.

Rabobank made as many as 384 internal attempts to rig yen Libor, Britain's Financial Conduct Authority said last month. As part of a "collusive effort" to manipulate rates, staff also sent at least 10 requests outside the bank and received seven from others, the FCA said.

Antitrust regulators have "a harder case to make" than financial watchdogs because they need to show a conspiracy between traders, said Robert Fleishman, a lawyer at Steptoe & Johnson in Brussels.

For at least five years beginning in 2005, benchmark submitters in London and Utrecht, Netherlands, would routinely take requests from traders seeking to fix the rate of Euribor and Libor for the U.S. dollar, yen and pound sterling, according to the U.S. Department of Justice statement of facts.

The Dutch lender declined to comment on whether it would be fined by the Brussels-based commission. Antoine Colombani, a spokesman for the EU regulator, also declined to comment.

"A big piece of the fact pattern seems to be internal communications from traders to submitters within the bank and that complicates a theory of conspiracy because under antitrust law you can't conspire with yourself," Fleishman said in a phone interview.

Citigroup is among lenders that will be fined by the EU as soon as December for rigging yen Libor submissions, two people with knowledge of the case said earlier this month. In a parallel probe, regulators are preparing to issue fines as soon as next month to settling banks accused of Euribor manipulation.

Avoiding punishment in the first wave of fines doesn't mean the bank is immune from future penalties if the EU antitrust arm decides to revisit the dossier, said one of the people.

Rabobank has "recently not been in talks" with the EU's antitrust regulator, Sipko Schat, a board member responsible for commercial banking at the Utrecht, Netherlands-based company, said on Oct. 29. "That may change in future. We have provided them with information but haven't heard from them since."

Schat resigned Monday as he lost support from the local banks that form the cooperative, the company said in a statement. That makes him the second board member to trip over the affair, after Chairman Piet Moerland stepped down on Oct. 29, when the fines were announced.

Banks were first quizzed by EU regulators in 2011 over manipulation of lending rates that may have helped them and others generate profits from derivatives trades. The EU, unlike financial supervisors, must build an antitrust case to show collusion among financial firms rather than demonstrate market abuse.

Two years on, the EU antitrust regulator is on the brink of levying its first penalties in a scandal that tarnished the image of banks emerging from the biggest financial crisis since the Great Depression.

Banks including Barclays, Deutsche Bank, Royal Bank of Scotland Group and Societe Generale entered into settlement talks with the commission, a person familiar with the Euribor probe said earlier this month.

Credit Agricole has said that it rejected a settlement in the Euribor case. HSBC Holdings Plc also dropped out of these settlement talks, people familiar with the case said this month.

Rabobank, a co-operative formed in 1898 to lend to Dutch farmers, was charged last month with wire fraud in a deferred prosecution agreement with the Justice Department and with "serious, prolonged and widespread misconduct" by the FCA.

Its fines, the second-largest over manipulation of Libor, brought total settlements in the rate-rigging probe to $3.7 billion. Global investigations into banks' attempts to manipulate the benchmarks for profit have led to fines and settlements for Barclays, RBS, UBS AG and ICAP.

Reuters reported on Nov. 6 that Rabobank was among lenders that would face EU fines next month, citing a banking industry source.