European banks pay heavy price for scandals
By Sara Webb and Katharina Bart
AMSTERDAM/ZURICH (Reuters) - Four European banks paid a heavy price on Tuesday in a clean-up of the financial industry, with Rabobank fined $1 billion and three other major lenders preparing for possibly huge legal costs after a string of scandals.
Dutch Rabobank said it would pay regulators in the United States, Britain and the Netherlands 774 million euros after 30 employees were involved in "inappropriate conduct" linked to interest rate manipulation.
Chief executive Piet Moerland resigned, becoming the second CEO of a bank involved in the rate rigging scandal to quit, following Bob Diamond's departure from British bank Barclays BARC.L last year.
European and U.S. banks are still struggling to cast off a variety of misdeeds revealed after the financial crisis erupted in 2008, and the relentless rise in the cost of fines, lawsuits and compensation shows no sign of abating.
Rabobank is the fifth lender to be fined for manipulating reference rates such as Libor (London Interbank Offered Rate), which are benchmarks for more than $300 trillion of financial assets. Regulators have now imposed penalties totaling $3.7 billion. Seven people have been charged with criminal offences.
Dutch Finance Minister Jeroen Dijsselbloem said Rabobank's "shameless fraud" was a long way from its cooperative origins.
The U.S. Justice Department agreed to defer criminal charges against Rabobank for two years - and drop them if it cooperated with investigations which are still under way.
Emails between traders and other staff revealed a culture which Moerland acknowledged would arouse indignation. "Don't worry mate - there's bigger crooks in the market than us guys!" wrote one after submitting an artificially high interest rate intended to distort the calculation of that day's Libor. Continued...