Rabobank faces US$440m-plus fine over rate-rigging

Rabobank faces a fine of more than US$440 million for Libor rigging as global regulators seek to increase the US$2.5 billion in penalties already levied in the rate-manipulation scandal.

Rabobank, the second-biggest Dutch lender, was next in line to reach a settlement with the United States Commodity Futures Trading Commission, the Department of Justice, and Britain's Financial Services Authority over claims it tried to manipulate benchmark interest rates, said four people with knowledge of the probe who asked not to be identified because the talks were private.

The penalty, which may come as soon as May, is likely to be between the £290 million (HK$3.4 billion) Barclays paid in June and the US$612 million Royal Bank of Scotland paid this month, one of the people said.

Rabobank, formed in 1898 as a co-operative to lend to Dutch farmers, is the country's only contributor to the London interbank offered rate (Libor), the benchmark for more than US$300 trillion of securities.

Barclays, UBS, and RBS have been fined more than US$2.5 billion following a global probe into Libor manipulation.

Traders rigged the benchmark to profit from bets on derivatives, while banks sought to submit artificially low rates to appear financially healthier than they were, according to regulators.

Closely held Rabobank was under scrutiny for alleged attempts to manipulate sterling Libor, dollar Libor, Japanese yen Libor, and Euribor in its London, New York, Tokyo, Singapore, and Hong Kong offices, one of the people said.

Hendrik Jan Eijpe, a spokesman for the Utrecht-based lender, declined to comment on the status of the probes.

The bank has said it has been subpoenaed or asked for information by watchdogs in eight jurisdictions, including the European Union, Japan, Hong Kong, Singapore and the Netherlands, and was co-operating.

The investigation had intensified in recent months, with officials from the DOJ and US Federal Bureau of Investigation travelling to London to interview present and former Rabobank employees, two of the people said.

Those talks had ended and the regulators were now in talks with the bank's lawyers over the details of a settlement, the people added.