[ by Larry Goldfarb ]

Managers at the Royal Bank of Scotland Group Plc explicitly participated and condoned the manipulation of Libor, according to an article from Bloomberg news.  Information obtained indicates that wrongdoing extended beyond the four traders the bank has fired.

Evidence has been uncovered that supports active manipulation by RBS traders:

• In an instant-message conversation in late 2007, Jezri Mohideen, then the bank’s head of yen products in Singapore, instructed colleagues in the U.K. to lower RBS’s submission to the London interbank offered rate that day

• RBS traders and their managers routinely sought to influence the firm’s Libor submissions between 2007 and 2010 to profit from derivatives bets, according to employees, regulators, and lawyers interviewed by Traders communicated with counterparts at other firms to discuss where rates should be set, one person David Greene, a senior partner at law firm Edwin Coe LLP in London: "This kind of activity was widespread in the industry.  A lot of the traders didn’t consider this behavior to be wrong.  They took it as the practice of the trade. This is how things operated, and it seemed harmless."

Regulators are now probing RBS’s yen, Swiss franc, and U.S. dollar sales-and-trading businesses, all part of the fixed- income division Fred Goodwin expanded before he was ousted as CEO in 2008, said two people who asked not to be identified because the bank’s internal investigation, begun more than two years ago, is still in progress.  Investigators are focusing on the firm’s swaps, inflation-trading and foreign-exchange teams, as well as on money-market traders who made daily Libor submissions, the people said.

The rate-rigging allegations are the biggest blow to the Edinburgh-based lender since it took 45.5 billion pounds from taxpayers in the largest bank bailout in history and Stephen Hester replaced Goodwin.  Analysts including Morgan Stanley’s Huw van Steenis estimate the scandal may cost RBS, the country’s third-biggest bank by assets, more than any U.K. competitor.

For further details, go to [Bloomberg, 9/25/12].