RBS hit by report of possible criminal charges over Libor

Tue Jan 29, 2013 5:56pm EST
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(Reuters) - Royal Bank of Scotland Group (RBS.L: Quote) saw 1.3 billion pounds ($2.1 billion) wiped off its value on Tuesday following a report that it could face criminal charges as part of an impending settlement over its role in a global interest rate rigging scandal.

The Wall Street Journal reported that U.S. authorities were pushing RBS to accept criminal charges as part of a settlement which will see it fined up to 500 million pounds for the attempted manipulation of the London interbank lending rate (Libor) and other benchmark interest rates.

"It's put the word 'Libor' back in front of the banks and people are using it as an excuse to take profits," says Central Markets chief strategist Richard Perry.

RBS shares closed the day down 6 percent, the leading faller in a 0.28 percent-weaker European bank sector , with volume in the bank's shares at 257 percent of the 90-day daily average.

The bank declined comment on the WSJ report.

One RBS shareholder told Reuters that criminal charges would make the bank more vulnerable to future litigation and said Chief Executive Stephen Hester would be reluctant for the bank to accept criminal responsibility.

"Stephen Hester is not the kind of man to play a dangerous game but the stakes here could be rather high," one of the bank's biggest institutional shareholders said.

The bank is braced for fines of up to 500 million pounds ($785 million) for its role in the scandal and expects the punishment to be meted out as early as next week, sources have said.

RBS, which is 81 percent owned by the British taxpayer, would be the third bank after Barclays (BARC.L: Quote) and UBS UBSN.VX to settle allegations over the attempted manipulation of the London interbank offered rate (Libor) and other benchmark interest rates.   Continued...

A Royal Bank of Scotland building in London April 7, 2009. REUTERS/Stephen Hird