RBS could face criminal charges for rate-fixing

Taxpayer-owned bank in talks with US watchdogs to agree a settlement and is likely to have to pay a fine of £500m

Royal Bank of Scotland is facing criminal charges in the US over allegations its traders tried to fix Libor interest rates, it has emerged.

People with knowledge of settlement talks between the taxpayer-owned RBS and US watchdogs confirmed that the issue of the bank accepting a criminal charge – which would hit an Asian subsidiary – is what is holding up a deal.

It came as Britain's financial watchdog admitted that top bankers had escaped sanction for misdeeds during the financial crisis because it was "easier to get the little guys" under Britain's regulatory system.

RBS is likely to pay around £500m in fines, but sources said the scale of wrongdoing at the bank was more similar to that at Barclays, which paid £290m last year, than to that at Swiss bank UBS, which paid £900m in fines earlier this year.

Pleading guilty to a criminal charge could expose RBS to potentially huge civil claims in the American courts. The bank is facing further controversy over what could be a bonus pool of up to £250m for its investment bankers.

While the investment bank has been radically cut in size, paying bankers at a state-owned institution £250m in bonuses after a fine of £500m, and maybe more, is set to stoke public outrage at the City's bonus culture.

Effectively taxpayers, as the owners of RBS, will be paying the fine and the bonuses. RBS is only in business because the Government injected £45bn into the bank to shore up its finances during the financial crisis in 2008.

Campaigners described the situation as "a telling example of what's still wrong with the financial sector: we reward bankers for ripping us off, then foot the bill for the fines as well".

David Hillman, spokesperson for the Robin Hood Tax campaign, said: "Little has changed since the last financial crisis – the take-take-take mentality continues in the City. It's time the Government dragged banks back on the straight and narrow and made them give something back to society."

The anger is likely to be exacerbated by the admission by Tracey McDermott, head of enforcement at the Financial Services Authority, to the Parliamentary Commission on Banking Standards that it is easier to sanction junior staff who have committed offences rather than senior executives.

Only Peter Cummings, head of corporate banking at HBOS, has been sanctioned for playing a part in a bank's failure. He paid £500,000, but said he would have fought the sanction if he had the resources.

Andrew Tyrie, the chairman of the Commission, described the regulator's "approved persons regime" for top bankers as "a toothless tiger with respect to the senior executives". He added: "I've been told its easier to get at the little guys." Ms McDermott then said: "I would accept it is easier."

Lord McFall said: "The public interest, I would suggest, is not being served by the FSA. The FSA has been subservient to the interests of this industry."

But while Ms McDermott said the watchdog had "not been as effective as we want to be" she denied this was the case. "We have taken action against senior individuals at large firms. There are a relatively small number, despite us having focused on it quite hard."

She said there were "issues of fairness and of human rights" when it came to taking action against top bosses and that the FSA, or its successor the Financial Conduct Authority, should not be in the business of penalising bad business decisions.

The Independent understands that both RBS and the various regulatory agencies, are still hoping a settlement will be reached by early next week.

Several other banks will follow over the next 12 months.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain