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RBS set for big fine over Libor scandal

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Royal Bank of Scotland chief executive Stephen Hester has hinted the bank is set for a huge fine on the back of the Libor scandal.

The bank is also set to announce, in its results this Friday, a further provision of at least £100m for the misselling of payment protection insurance, taking total PPI costs to £1.3bn, and £100m of costs relating to the IT problems it suffered in June.

Speaking to The Guardian, Hester admitted the bank was likely to follow Barclays, which was fined £290m by US and UK regulators earlier this month.

He said: “RBS is one of the banks tied up in Libor. We will have our day in that particular spotlight as well.”

Hester said he did not know the size of the fine but  added that the investigation by the FSA was “in proces”.

He added: “Even though when all the Libor [fines] are out most of it is going to be around the wrongdoings of a handful of people at a number of banks. Those wrongdoings taint a whole industry beyond the handful of people and that makes it a huge problem.”

Hester did not offer any sympathy to Barclays chief executive Bob Diamond following his departure in the wake of the scandal.

Hester said: “Everyone has to live with the prospect of professional mortality. Chief executive jobs bring with them job insecurity … I’ve always accepted that part of it is that I will not exit in a way and timing of my choice.”

RBS is to reveal results on Friday that are expected to show lender made a £1.2bn pre-tax loss. The bank is also set show that it paid £25m to a single businessman who was mis-sold products intended to protect against interest rate rises.

Earlier this month a report by Morgan Stanley said RBS was likely to be one of the banks hit hardest by the Libor scandal. The group said banks’ Libor costs could rise to £14bn for the banking industry.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Interesting that the government bought into two failing banks both of which now face massive fines for malpractice. Yet another cost to the taxpayer. Thankfully they don’t give investment advice although they dictate how IFAs should give it!! What have been the ‘hidden’ costs with their investment fiasco which will effect everyone for years?

  2. So where are the prosecutions,banning orders and personal fines!!!

  3. I will be suprised if they do get a fine, the FSA failed to fine them before stating it un-ethical to fine them as they are owned, by and large by the the UK tax payers. Also I doubt if they will chase the people involved as they have the same school ties.

  4. It’s always just “a handful of people” isn’t it, as in “Nobody told me anything about it”, whereas the evidence tends to point to such activities having been systemic and thus very much known to the management.

    And, despite the often-told lie that the FSA (fsa.gov.uk) is independent of government, the government intends to snaffle all these fines for itself. Were the FSA remotely independent of government, it would assert this status and refuse to hand over any fines. Yet, by some unexplained line of reasoning with which, to the best of my knowledge, nobody else agrees, Adair Turner seems to think it’s actually a good idea that the government should remove all cross-subsidy between the fines it raises and the ever-escalating levy bill imposed on all those who do their honest best to abide by the rules and run their businesses in an ethical and TCF manner.

    Can anyone think of a single instance where the FSA has made the slightest attempt to assert its supposed independence from the government? Everybody knows that, in reality, the FSA is just a puppet of the Treasury.

    Perhaps this is yet another reason why the industry needs an Independent Regulatory Oversight Committee with the authority not just to challenge and, if appropriate, overrule regulatory injustices but to challenge government proposals to bleed the industry wantonly of yet more money.

  5. Having previously been a bank adviser and suffered the complete pettiness of an over prescriptive compliance department I find the unfolding situation completely halarious!
    The costs the bank has suffered because of its mind boggling rapacious stupidity is beyond belief.
    Stephen Hester has only to worry about getting the sack (and I would love to get the sack on his severance package). Many of the bank’s costomers who have borrowed money to start a business face losing a lot more, principly their home! The likes of Fred Goodwin have walked away relatively unscathed, I wonder what he is doing now? Consultantcy work?

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