Bloomberg News

RBS Said to Suspend Trader Over Interest Rate Rigging

October 04, 2012

RBS Said to Suspend Trader as Rate-Rigging Spreads Beyond Libor

Pedestrians pass the south tower at One Raffles Quay, which houses the offices of the Royal Bank of Scotland Group Plc (RBS), in Singapore. The Monetary Authority of Singapore, the country’s central bank, said in July it will examine how banks are setting “key market interest rate benchmarks” amid similar reviews by regulators in Europe and the U.S. Photographer: Munshi Ahmed/Bloomberg

Royal Bank of Scotland Group Plc (RBS) suspended a trader for trying to rig the Singapore dollar swap offer rate, indicating employees may have sought to manipulate more than just Libor, two people briefed on the matter said.

Senior trader Chong Wen Kuang was put on leave earlier this year for trying to rig the interest rate to benefit his trading position, said the people who asked not to be identified because the bank is probing his actions. He is the first RBS employee to be suspended or fired for attempting to rig a benchmark other than the London interbank offered rate, one of the people said.

RBS, Britain’s biggest government-owned bank, is one of at least a dozen firms being investigated over allegations they colluded to influence interest rates so they could profit from derivatives bets. RBS started its own probe into allegations of rate-rigging in the middle of 2010, according to one of the people. The Edinburgh-based lender fired four traders last year for rigging the yen and Swiss franc Libors, and suspended a further two, who have since been reinstated, the person said.

The Monetary Authority of Singapore, the country’s central bank, said in July it will examine how banks are setting “key market interest rate benchmarks” amid similar reviews by regulators in Europe and the U.S.

The Singapore dollar swap offer rate, one of two main benchmark interest rates in the city-state, refers to the average cost of borrowing Singapore dollars for a set period by borrowing U.S. dollars and exchanging them into the local currency. It is calculated by a daily poll overseen by the Association of Banks in Singapore, a lobby group.

Key Person

An e-mail sent to Chong’s RBS account was returned with a delivery-failure message. Calls to his office were answered by colleagues who declined to be identified and said he was away from the office. A receptionist at RBS in Singapore said there was no record for Chong in the bank’s global directory. He is still listed as a key person at RBS for Singapore government securities, according to the MAS’s directory.

Michael Strachan, a spokesman for RBS, declined to comment on Chong and referred to a previously released statement.

“Our investigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing,” the bank said in the statement. “RBS and its employees continue to cooperate fully with regulators.”

Chong was identified by Tan Chi Min, the firm’s former Singapore-based head of Asian delta trading, who is suing the bank for wrongful dismissal, as one of the bankers whose duties involved providing rate setters with input on where they should fix the benchmark on any given day, according to a Dec. 27 court document. Tan, who was fired last year for trying to manipulate Libor, alleged in a suit filed at the Singapore High Court in December that rate manipulation was systemic at RBS.

Internal Probe

RBS derivatives traders and managers, some still employed by the bank, regularly asked inputters to submit rates favorable to their trading positions, people with knowledge of the lender’s probe said last week. Even so, more than two years after the bank started its investigation, no senior managers have been fired, though RBS may still take disciplinary action against some employees, one of the people said.

In a Jan. 18 court filing, RBS detailed its disciplinary policy, saying suspension will normally be on full pay, doesn’t amount to disciplinary action in itself, and will be reviewed to ensure it is not “unnecessarily protracted.”

Libor is calculated by a daily poll carried out daily by Thomson Reuters Corp. on behalf of the British Bankers’ Association, a London-based lobby group, that asks firms to estimate how much it would cost to borrow from each other for different periods and in different currencies. The top and bottom quartiles of quotes are excluded, and those left are averaged and published for individual currencies before noon in London.

Barclays Plc, Britain’s second-biggest lender by assets, is the only bank to have settled with regulators over the rigging of interest rates. The London-based company paid a record 290 million pound ($469 million) fine in June for manipulating Libor. Chief Executive Officer Robert Diamond and Chairman Marcus Agius resigned in the aftermath.

To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; Andrea Tan in Singapore at atan17@bloomberg.net; Liam Vaughan in London at lvaughan6@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net; Douglas Wong at dwong19@bloomberg.net


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