[ by Howard Haykin ]

The chief of Royal Bank of Scotland’s Japanese investment banking unit will resign, the latest high-level, high-profile victim of the bank's February settlement of its role in manipulating the benchmark Libor interest rate. 

RBS's settlement with the regulators' in February 2013 was costly at the time:  a $615 million penalty and and a criminal charge against the bank's Japanese subsidiary. The cost just rose, with the resignation of Ryusuke Otani, who runs the British bank’s investment banking business in Japan;  it's likely he will step down by the end of the week. 

Mr. Otani, a former Citigroup banker, follows moves by Japanese authorities to punish Royal Bank of Scotland over its role in the manipulation of the London interbank offered rate, or Libor.

It's uncertain that this 3rd leg of disciplinary action will be the last for the British bank.  Last week, the SESC (Securities and Exchange Surveillance Commission of Japan) asked local regulators to issue a so-called administrative action against the Edinburgh-based bank after some of its traders attempted to alter a key benchmark rate for financial gain. Actually, another derivatives trader, Simon Green, was fired last month in connection to the Libor scandal, according to a person with direct knowledge of the matter.

Three Banking Culprits.  Having conducted comprehensive investigations of 15 or so global banks in the past year, all the global authorities have to show for their efforts are settlements with just 3 banks – Barclays, UBS, and RBS.  Collectively, the 3 banks have paid in $2.6 billion.  Libor investigations of the other banks - including Citigroup and Deutsche Bank - are reportedly still underway. 

It's expected that billions upon billions more in penalties will be paid out and heads of more senior executives will roll - before the investigations are concluded.  Japanese regulators have taken similar steps against UBS and Citigroup after their investigations found that some of the banks’ traders had attempted to manipulate key benchmark rates in the country.  [C-I Note:  Can the other banks be completely innocent?].

Royal Bank of Scotland’s chief executive, Stephen Hester, apologized in February for the bank’s role in the scandal, adding that six people had been fired because of their role in the manipulation. A further eight banks had left the bank because the wrongdoing was discovered, while a further six individuals have been disciplined, but remain with the bank.

For further details, go to:  [ Dealbook, 4/11/13 ].