RBS Libor rigging scandal

A claim has been brought against the Royal Bank of Scotland (RBS) in relation to mis-sold interest rate swaps, which had been benchmarked against the GBP Libor.

The trial is being brought by former business customer Property Alliance Group (PAG). PAG, a property developer, claimed RBS mis-sold four swap contracts between 2004 and 2008 for loans of around £71,000,000. They ended the contracts due to substantial losses being incurred by paying around £8,000,000.

Previously, RBS has admitted to manipulating Libor rates by making false submissions in Japanese yen and Swiss francs between 2006 and 2010 for its own benefit. RBS was forced to pay a fine of $150,000,000.  Evidence will be heard at the High Court that the Libor rigging went further than admitted, to include allegations they manipulated the benchmark in US dollars and British pounds.

Libor (London Inter-bank Offered Rate) is meant to represent the interest that banks would charge if they were to lend to each other in a several different currencies. Lenders submit their inter-bank interest rates to the British Bankers Association (BBA), and this becomes the benchmark for financial products sold.

Several banks have admitted to manipulating Libor rates by making false submissions to BBA, and they have been forced to pay huge fines.

PAG are claiming fraud due to the swaps being benchmarked to a rate manipulated by RBS.

In 2010, RBS moved PAG to its Global Restructuring Group (GRG). However, PAG feel they did not need financial restructuring, and were moved to GRG to stop the complaints regarding the swaps. In total, PAG are suing RBS for £29,000,000.

RBS are denying the claims. They are arguing that PAG did not lose out because of any Libor manipulation, and they are rejecting any alleged wrongdoing by GRG. It has been reported that an RBS spokeswoman has said that RBS “will continue vigorously to defend this claim”.

Allegedly, internal documents showing the wider scale of the scandal are due to be heard in court.

A High Court judge has already ruled that the documents “arguably support the allegations of misconduct relating to GBP Libor”.

At preliminary hearing, the judge, Sir Colin Birss also said that two of RBS’s board members at the time – Johnny Cameron, then chairman of global banking and markets, and Guy Whittaker, then group finance director – were aware of questions raised at the meeting at the Bank of England in 2008 about the accuracy of US dollar Libor.

Reportedly, Cameron circulated a note of the meeting to senior figures within RBS, as well as the executive assistant of Fred Goodwin, then chief executive of RBS Group, saying ‘They wanted Banks to play US dollar Libor very ‘straight’.’

In relation to Cameron’s note, the judge said “this material on its own does not support a plea of dishonest manipulation as opposed to knowledge that the rates were inaccurate, but it provides a properly arguable foundation for PAG’s allegation that those at the highest levels were aware of serious problems with Libor”.

Potential claimants against RBS are watching this case. They include Stuart Wall, owner of Opal Property Group, a student housing company that went bankrupt in 2013, who is suing for more than £400,000,000 over an interest rate swap that was also pegged to Libor.

A little bit about what we do here at Seneca Banking…

Seneca Banking Consultants is an experienced and specialist advisor to individuals, partnerships, SMEs and large corporations on claims for mis-sold Interest Rate Hedging Products. We are dedicated to getting back the money you are owed if you have been mis-sold an Interest Rate Swap or other Interest Rate Hedging Product, such as Cap, Collar or Tailored Business Loan.

We are uniquely placed to be able to offer a claims management solution to those who fear they may have been mis-sold a complex IRHP or Currency Swap. We are able to analyse their financial suitability, advise on the grounds for a claim and seek satisfactory redress if needed.