Royal Bank of Scotland Group Plc’s interest-rate traders were seated with one of the main rate setters in its London office to share information, and discussed rates on conference calls, a fired trader said.
Tan Chi Min, let go over accusations he manipulated the London interbank offered rate, made the claims in court papers filed with the Singapore High Court on March 23. Tan, who sued RBS for wrongful dismissal, has accused the bank of using an internal probe into Libor manipulation to find scapegoats after condoning such behavior.
Regulators worldwide are investigating whether banks attempted to manipulate rates including Libor, the basis for $360 trillion of securities around the globe. The probes have called into question whether the banks can be trusted to set the rates with minimal regulatory oversight. Investigators have sought information from lenders including RBS, Citigroup Inc. (C:US) and Deutsche Bank AG.
Paul White, RBS’s principal rate setter for yen Libor, and Tan’s team in London were “specifically seated together” in the London office to “facilitate the sharing of information and workload,” Tan, the bank’s former head of short-term interest- rate trading for the yen, said in court papers.
White, who was based in London, was also dismissed as part of the bank’s Libor probe, two people briefed on the matter said last month. He hasn’t been accused of wrongdoing by regulators. Contact numbers for White couldn’t be located through the Internet or directory assistance.
Sometime in August or September 2011, RBS’s head of compliance Sim Suh-Ting sent an internal e-mail to Robert Brennan and Todd Morakis “to the effect that it was acceptable for a trader to request the SOR rate setters that the SOR be set at a specific level,” Tan said in his filing, referring to swap-offer rates.
Morakis, who was Tan’s manager, also orally confirmed to him around October that “the practice of requesting to change the rate Libor is common in every rate setting environment in the banking industry,” Tan said in the filing.
Patricia Choo, a Singapore-based RBS spokeswoman, declined to comment on behalf of Sim, Brennan and Morakis and on Tan’s claims. Tan’s lawyer Suresh Nair declined to comment.
Tan said he was treated as a “resource person” on yen Libor and was frequently asked by RBS’s yen traders about the level at which the rate was likely to be set, with no indication that this was outside his scope of duties, according to his court filing.
Discussions on rate inputs were held via electronic messages, telephone calls and regular meetings in RBS’s offices in Singapore, Tokyo and London, Tan said. Rate requests were also sometimes made during daily conference calls held at 4:30 p.m. Singapore time among the bank’s yen traders and managers, according to his court filing.
The Monetary Authority of Singapore said March 8 regulators elsewhere have sought its help with probes into the possible manipulation of global interest rates. It didn’t identify the bodies.
The U.S. is conducting a criminal investigation into suspected manipulation of benchmark rates including Libor, the Justice Department said in a letter to a federal judge that was made public earlier this month. The European Union, U.K.’s Financial Services Authority and the Financial Services Agency in Japan have started probes as well.
RBS, the U.K.’s largest government-owned bank, said it fired Tan because he tried to improperly influence the bank’s rate setters from 2007 to 2011 to persuade them to offer Libor submissions that would benefit his trading positions, according to the bank’s court papers in January. Tan is seeking to recoup $1.5 million in bonuses and 3.3 million RBS shares that he says he’s owed.
Libor is generated through a daily survey of firms conducted on behalf of the British Bankers’ Association in which banks are asked how much it would cost them to borrow from one another for 15 different time periods, from overnight to one year. A predetermined number of quotes are excluded and those left are averaged and published for individual currencies including dollars, euro, yen and Swiss francs before noon.
The case is Tan Chi Min v The Royal Bank of Scotland, S939/2011 in the Singapore High Court.
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