RBS instant messages show Libor rates skewed

Royal Bank of Scotland Group Plc trader Tan Chi Min told colleagues the firm was able to move global interest rates, according to court filings.

Transcripts of internal RBS instant messages were included in a 231-page affidavit filed Sept. 19 by Tan, the bank’s former Singapore-based head of delta trading for Asia, who’s suing Britain’s third-biggest lender by assets for wrongful dismissal after being fired last year for allegedly trying to manipulate the London interbank offered rate, or Libor.

“Nice Libor,” Tan said in an April 2, 2008, instant message with traders including Neil Danziger, who also was fired by RBS, and David Pieri. “Our six-month fixing moved the entire fixing, hahahah.”

The conversations among traders at RBS and firms including Deutsche Bank AG illustrate how the risk of abuse was embedded in the process for setting Libor, the benchmark for more than $300 trillion of securities worldwide. RBS, 81 percent owned by the British government, is one of at least a dozen banks being probed over allegations they colluded to manipulate the rate so they could profit from bets on interest-rate derivatives.

Barclays Plc, Britain’s second-biggest lender, was fined 290 million pounds ($470 million) in June for rigging the rate. Chief Executive Officer Robert Diamond and Chairman Marcus Agius resigned in the aftermath. RBS fell 5.5 percent, or 14.9 pence, to 255.10 pence in London trading today, making it the biggest decliner in the six-member FTSE 350 Banks Index.

Singapore Suit

RBS sent Tan copies of instant-message chats he had with others as evidence of potential wrongdoing in an Aug. 29, 2011, letter telling him the bank was bringing disciplinary proceedings against him, the papers show. Tan said in his lawsuit, filed in December, that the bank had condoned the rates manipulation and sought scapegoats in an internal probe.

The bank asked in a Sept. 24 filing that the Singapore High Court seal the papers until at least one of the probes by the U.S. Commodity Futures Trading Commission, the Department of Justice’s fraud division and Britain’s Financial Services Authority is completed.

Making the documents publicly accessible may have “extensive potential prejudice” on the confidential regulatory investigations, RBS said in the filing. The court documents, inspected yesterday, have now been sealed.

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

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