02 Jul Libor scandal spreads
With allegations of widespread fraud and failure in the banking sector top executives feel it is sanction enough to forego bonuses and say sorry
Scottish news: Libor scandal spreads
by Jamie Mann
The Royal Bank of Scotland (RBS) is moving into the media spotlight after dismissing four traders following allegations of their involvement in the Libor-fixing scandal.
This news coincides with the resignation of Barclays chairman Marcus Agius, covered today by Scottish Times here, and waived bonuses from other banking executives including Barclays CEO Bob Diamond and RBS’s Stephen Hester.
The Edinburgh-based bank will face investigation from the Financial Services Authority (FSA) for the possible manipulation of the key bank lending rate. Barclays was last week fined £290m ($450m) by the FSA for lying about the interest rate it was receiving on loans from other banks.
The former Labour Chancellor, also current chief of the anti-independence ‘Better Together’ campaign, Alastair Darling told the Telegraph that the Barclays culture ‘encouraged’ the Libor scandal, and called for an overhaul of its regulation.
Mr Darling though is facing criticism as we was Chancellor and so responsible for overseeing City regulation when the practices appear to have started. Darling has also faced scrutiny recently for his own part in the financial crisis as the Bank of England Governor, Sir Mervyn King, claimed that Mr Darling’s failure to act as Chancellor during the Northern Rock crisis could have cost Britain 1m jobs, including 100,000 jobs in Scotland.
Both Northern Rock and RBS were prominent in the inception of the 2008 financial crisis, with the 83 percent publicly-owned RBS facing collapse and receiving a £45.5 billion taxpayer-funded bailout as revealed in RBS: Inside the Bank that Ran Out of Money.
Last month, almost 17m customers of the RBS Banking Group subsidiaries experienced financial pandemonium when they were unable to make withdrawals and transfers from their accounts. The banking group struggled to alleviate customer concerns with a backlog comprised of 11.5m NatWest and 3.5m RBS customers, as well as, 1.9m Ulster Bank customers in Northern Ireland. A Spokesperson for Bank claimed the problems were caused by a computer systems failure.
Whilst the backlogs of the larger RBS and Natwest banks have been cleared, the banking group admitted that uncompleted Ulster Bank transactions would not be resolved until today. The shadow secretary of state for North Ireland, Vernon Coaker has questioned whether the transactions of Ulster Bank have been neglected by RBS. “Why have people in the rest of the UK have been prioritised at the expense of those in Northern Ireland, who will continue to be without access to their money well into the week?”.
Following a series of banking woes in recent weeks, RBS has climbed onto a list of the world’s top 25 loss-making banks. RBS had the 21st highest losses in 2011 with a $1.1bn pre-tax loss. Following the success of the Leveson Inquiry into media ethics which delved into the widespread phone-hacking scandal, Ann Pettifor, a leading economist, has launched a petition for a similar inquiry into UK banking ethics. To access the petition click here.
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