Royal Bank of Canada joins lists of suspects in Libor scandal

The Royal Bank of Canada is the latest to be added to the list of banks suspected of participating in the Libor rigging scandal.
Canada’s biggest bank by assets, the Royal Bank of Canada (RBC) (TSE:RY), is the latest major bank to be subpoenaed for its “possible” role in the rigging scandal of the London Interbank Offered Rate (Libor).
Libor and the Euribor (Euro interbank offered rate) are benchmark reference rates that indicate the interest rate that banks charge when lending to each other.
On a daily basis, a number of banks submit rates, at which they believe they can borrow, and an average is calculated.
In the UK, Libor serves as a benchmark for everything including interest rate swaps, credit cards and individual mortgages.
It is published on behalf of the British Bankers Association (BBA), which is currently reviewing the way in which LIBOR is set.
According to media reports, RBC was one of nine banks “more recently” served a subpoena by state prosecutors from New York and Connecticut who are probing the bank’s role in the widely publicized Libor scandal.
A Globe and Mail report quoted Gillian McArdle, a spokesperson for RBC, as saying that the bank believes its submissions were complete and that it is “determined” its Libor submissions reflected its cost of funds.
Reports said Friday that New York Attorney-General Eric Schneiderman and Connecticut Attorney-General George Jepsen are investigating 16 major global bank banks to determine whether any conspired to manipulate the benchmark rate that is used to set more than $300-trillion of securities and loans.
During the summer months, numerous subpoenas requesting communications with bank executives were sent out.
In June, UK's chancellor George Osborne said Barclays (LON:BARC), who was the first to be implicated in the rigging scandal, was “not alone” in its guilt of fixing the interest rates at which banks lend to each other in a statement to parliament.
Barclays was ordered to pay fines totalling £290 million for its involvement in manipulating the Libor and Euribor rates.
The US Commodity Futures Trading Commission and the United States Department of Justice Fraud Section are also punishing Barclays for manipulating the rates with a US$200 million fine from the former and US$160 million fine from the latter.
UBS, (NYSE: UBS) HSBC (LON:HSBA) Citigroup (NYSE:C) and Royal Bank of Scotland (LON:RBS) are also being investigated, with JPMorgan Chase & Co.(NYSE:JPM) joining the list of suspects in August.
Other banks indicated in the scandal include Bank of America (NYSE:BAC), Bank of Tokyo Mitsubishi UFJ, Credit Suisse, Lloyds Banking Group, Rabobank, Société Générale, Norinchukin Bank and West LB, reports have said.
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