Royal Bank of Scotland Group Plc (RBS)’s Japan brokerage head resigned after the country’s financial regulator punished the unit for attempts to manipulate benchmark interest rates.
RBS Securities Japan Ltd. country representative Ryusuke Otani left the firm today and was replaced by Shoji Taniguchi, it said in a statement on its website. The Financial Services Agency ordered the firm to improve operations, the regulator said in a separate statement.
The punishment comes two months after the unit pleaded guilty to wire fraud as part of a $612 million settlement with the U.K. and U.S. for rigging the London interbank offered rate. More than a dozen banks and brokers are being probed worldwide for influencing benchmarks including Libor, the benchmark for at least $300 trillion of securities.
RBS must submit a report to the FSA by May 13 describing how it will improve compliance and prevent a recurrence, the regulator said. The FSA handed down the penalties a week after the Securities and Exchange Surveillance Commission recommended administrative action against the firm.
From around mid-2006 to early 2010, an unidentified RBS trader and his colleagues asked employees responsible for making yen Libor submissions to change them to favor their derivatives portfolio, the SESC said on April 5. The conduct was “seriously unjust and malicious,” it said.
RBS Securities Japan apologized to customers for the issues that led to the business improvement order. The firm “will undertake a comprehensive review of its governance structure,” it said in the statement.
Otani, who became Japan representative of the brokerage in 2007, isn’t the first top executive of a foreign bank to resign following interest-rate breaches in the country. Citigroup Inc. (C:US)’s Japan brokerage head, Brian Mccappin, stepped down in January 2012 after the SESC found that employees of the unit tried to influence benchmark rates.
The FSA banned New York-based Citigroup from trading tied to Libor and the Tokyo interbank offered rate for two weeks. Zurich-based UBS AG (UBSN) received a one-week suspension at the time for similar breaches.
UBS was fined about $1.5 billion in December by U.S., U.K. and Swiss regulators for trying to rig rates. London-based Barclays Plc (BARC) was fined 290 million pounds ($446 million) in a global settlement in June, and Robert Diamond resigned as CEO.
Edinburgh-based RBS, 81 percent owned by British taxpayers after getting the world’s biggest bank bailout during the global financial crisis, said in February it had dismissed six individuals from the bank for Libor-related misconduct. A seventh, Simon Green, who traded derivatives tied to short-term moves in interest rates in dollars and euros, was fired last month, two people with knowledge of the move said.
Lloyds Banking Group Plc (LLOY), the second-largest U.K. government-owned lender, is probing two money-markets traders over their alleged role in rigging rates, three people familiar with the matter said.
Libor is determined by a daily poll that asks banks to estimate how much it would cost them to borrow from each other for different time-frames and in different currencies. The top and bottom quartiles are excluded and an average is taken of the remaining quotes.
To contact the reporters on this story: Takahiko Hyuga in Tokyo at firstname.lastname@example.org; Takako Taniguchi in Tokyo at email@example.com
To contact the editor responsible for this story: Chitra Somayaji at firstname.lastname@example.org