RBS instant messages show Libor rates skewed

‘Mixed Feelings’

Libor is calculated by a poll carried out daily on behalf of the British Bankers’ Association that asks firms to estimate how much it would cost to borrow from each other for different periods and in different currencies. The BBA signaled yesterday it will give up oversight of the rate. The top and bottom quartiles of quotes are excluded, and those left are averaged and published for individual currencies before noon in London. RBS is among 13 banks that set yen Libor.

“What’s the call on Libor,” Jezri Mohideen, then the bank’s head of yen products in Singapore, asked Danziger in an Aug. 21, 2007, chat.

“Where would you like it, Libor that is,” Danziger asked, according to a transcript included in Tan’s filings.

“Mixed feelings, but mostly I’d like it all lower so the world starts to make a little sense,” another trader responded.

“The whole HF world will be kissing you instead of calling me if Libor move lower,” Tan said, referring to hedge funds.

‘Maybe More’

“OK, I will move the curve down 1 basis point, maybe more if I can,” Danziger replied.

Danziger and Pieri declined to comment. Mohideen, who was put in charge of the bank’s rates trading for Europe and the Asia-Pacific region in 2010, didn’t respond to messages left on his mobile telephone and his office.

In another conversation on March 27, 2008, Tan called for RBS to raise its Libor submission, saying an earlier lower figure the bank submitted may have cost his team 200,000 pounds.

“We need to bump it way up high, highest among all if possible,” Tan said.

Tan also asked for a high submission in an Aug. 20, 2007, instant message to Scott Nygaard, global head of RBS’s treasury markets in London.

“We want high fix in 3s,” Tan said in the message. “Neil is the one setting the yen Libor in London now and for this week and next.”

“Go Neil,” Nygaard responded. “Hahahaha.”

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