RBS seeks early rate scandal settlement Posted on » Saturday, November 03, 2012

LONDON: Royal Bank of Scotland (RBS) faces fines for its part in a global interest rate rigging scandal and wants to reach a settlement as soon as possible. US and UK authorities are investigating the part-nationalised bank over how it set Libor and other interest rates and it is expected to be one of the next to settle after British rival Barclays was fined $450 million in June. RBS expects to start talks on a settlement soon, which is likely to result in financial penalties, the bank said yesterday as it published third-quarter results. Chief executive Stephen Hester said the timing of a settlement was in the hands of regulators. "We are up for settling with all and every one as soon as they are ready." Hester said it was difficult to assess whether RBS would be hit with a bigger fine than Barclays, the only bank to settle so far. More than a dozen banks are under investigation by authorities in the US, Europe and Asia. Even if a fine was smaller than Barclays' penalty it would still be a "miserable day" for RBS, Hester said. "It is a deeply regrettable thing ... this is the sort of thing the industry has to put behind it," he said. Hester expected details of a settlement to emerge between now and the bank's full year results next February. "I'd be disappointed if we were talking to you at our full year results in February without having had more news but it's not under my control." RBS has dismissed a number of employees for misconduct after its own investigations into interest rate setting. Libor and other past mistakes are threatening to overshadow Hester's attempts to turn the bank around, which he said would be complete in the next 15-18 months. The bank is under political pressure to shrink its investment bank further and to consider the future of its US business, Citizens because it does not fit with RBS's narrowed focus on its home market. However analysts, who estimate Citizens could fetch over £9bn, expect Hester to delay any sale until he has got the business into better shape. He said yesterday that Citizens was a core asset, but left the door open for a disposal. "I've never ruled anything out and I'm not going to start ruling it out now," he said. But he said there was a "cogent and coherent strategy" for the bank "to not have all its eggs in one geographic basket." The bank set aside another £400m to compensate customers mis-sold loan insurance, bringing its total provision to £1.7bn. Its third-quarter operating profit of £1.05bn ($1.69bn), was up from £2m in the same period the previous year, as losses from bad debts dropped. Bad debts were £1.18bn in the third quarter, down 12pc from the previous three months. Staff costs fell five per cent. The bank has cut 9,900 staff in the past year, or 7pc of its workforce, most notably at its investment bank. That business saw a two per cent dip in revenue from the previous quarter. But its operating profit jumped 18pc to £295m due to lower costs.