The Royal Bank of Scotland (RBS) carried on rigging the Libor rate for two years after we bailed it out.
It’s now been fined £390 million, on top of US fines. It’s making traders return some of their bonuses.
But investment boss Stephen Hester can hold onto his £2 million from 2010. It’s the only bonus he’s had and “that’s clawback enough” says RBS chair Sir Philip Hampton.
Although it’s much less than has been clawed back from the 36,000 staff who’ve been laid off since 2008.
Libor is used to set borrowing rates, from ordinary people’s mortgages to corporate loans. In theory it’s conjured up by market forces based on reports from banks.
But emails published last week show how casually banks would rig their own casino to boost their traders’ winnings.
“It’s just amazing how Libor fixing can make you that much money,” said one trader. “It’s a cartel now in London.”
Sometimes all it took was a “pretty please”. One email says “The hedge fund world will be kissing you instead of calling me if Libor moves lower.”
A bit of subtlety crept in as banks came under scrutiny.
One submitter refused an email request to fix the rate. He phoned straight back to say the problem wasn’t the scam, but talking about it online.
“So yeah, leave it with me, and uh, it won’t be a problem,” he concluded with a chuckle.
Up to 20 banks may be involved. Banks also lied about Libor to cover up their financial problems before the crash.