U.S Regulator FDIC suing 16 international banks for rigging interest rates (Libor)
Royal Bank of Canada, along with 15 other financial institutions, is being sued by the U.S. Federal Deposit Insurance Corp. over its alleged participation in interest rate rigging.
The complaint asserts claims against the banks including breach of contract, unjust enrichment, fraud, conspiracy and negligent misrepresentation.
The FDIC, which manages deposit insurance for U.S. banks, accuses the defendants of colluding to suppress interest rates.
The lawsuit, filed Friday, is the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate. Major global banks such as Barclays PLC, UBS AG and Royal Bank of Scotland Group PLC have paid large fines for their participation in rigging the key interest rate.
To date, RBC has not settled any Libor lawsuits, nor has it been found liable in any cases.
RBC declined to comment on the latest case, and the FDIC said it does not comment on pending litigation.
However RBC website says here on their site: ” We have a team of dedicated fraud experts working 24/7…”
RBC is named in the latest suit because it was at “all times relevant” a member of the panel that helped set the U.S. dollar Libor rate, and because it “engaged in financial transactions related to U.S. dollar Libor” with banks that fell into receivership.
The FDIC said RBC’s conduct, along with the 15 other banks, caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.
RBC was specifically named for swap agreements it had entered into with both WaMu and IndyMac.
“The closed banks’ losses flowed directly from, among other things, the harm to competition caused by the fraud and collusion alleged in the complaint,” the FDIC said in the lawsuit.
Other defendants include Bank of America Corp., Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC and JPMorgan Chase & Co.
The lawsuit also named the British Bankers’ Association, the U.K. trade organization that during the period at issue administered Libor.
Regulators in the United States, Europe and Asia have been probing many banks for manipulating Libor and other rate benchmarks.
Libor, which is the average rate that a panel of banks say they can borrow unsecured funds, has become a key rate globally, underpinning more than $550 trillion in financial products, from home loans to derivatives.
The Libor and related Euribor investigations have so far seen U.S. and European regulators fine 10 banks and brokerages for $6 billion and bring charges against 13 individuals.
The FDIC lawsuit joins an array of civil actions filed in the wake of the scandal.
It seeks unspecified damages in order to recover for losses sustained by the closed banks that the regulator seized.