RBS Busted On Libor Manipulation: "its just amazing how libor fixing can make you that much money"
Six months after the Barclays epic wristslap in which there were none - zero - criminal charges against Libor manipulators, it is time to trot out the same old theatrical song and dance again, this time focusing on bailed out RBS, which the CFTC just fined a whopping sum of $325 million, modestly less than the $16 billion profit the bank made in 2007, followed by the epic subsequent collapse which saw $104 billion in bailouts to keep the bank afloat courtesy of Biritsh taxpayers. In other words: manipulate the world's most sensitive credit-related metric, and you will see either 5% of your peak profits deducted, or we will force you to get even more bailouts.
So digging into the details of this latest farce (while we still wait for the DOJ to launch a suit against Warren Buffett's Moody's) from the CFTC:
- As recently as 2010 and dating back to at least mid-2006, RBS made hundreds of attempts to manipulate Yen and Swiss Franc LIBOR, and made false LIBOR submissions to benefit its derivatives and money market trading positions; RBS succeeded at times in manipulating Yen and Swiss Franc LIBOR;
- At times, RBS aided and abetted other panel banks’ attempts to manipulate those same rates;
- The misconduct involved more than a dozen RBS derivatives and money market traders, one manager, and multiple offices around the world, including London, Singapore, and Tokyo; and
- The unlawful conduct continued even after RBS traders learned that a LIBOR investigation had been commenced by the CFTC.
Said otherwise, until one of these wonderful manipulative creeps is beheaded demonstratively (either figuratively or literally) in the town square, nothing will ever change.
And now the good stuff - the quotes.
EXAMPLES OF MISCONDUCT
Yen LIBOR Manipulative Conduct Within RBS:
August 20, 2007: (Emphasis added.) (RBS Order pp. 17-18.)
Yen Trader 4: where’s young [Yen Trader 1] thinking of setting it?
Yen Trader 1: where would you like it[,] libor that is[,] same as yesterday is call
Yen Trader 4: haha, glad you clarified ! mixed feelings but mostly I’d like it all lower so the world starts to make a little more sense.
Senior Yen Trader: the whole HF [hedge fund] world will be kissing you instead of calling me if libor move lower
Yen Trader 1: ok, i will move the curve down[,] 1bp[,] maybe more[,] if I can
Senior Yen Trader: maybe after tomorrow fixing hehehe
Yen Trader 1: fine[,] will go with same as yesterday then
Senior Yen Trader: cool
Yen Trader 1: maybe a touch higher tomorrow
August 20, 2007: (Emphasis added.) (Reflecting awareness of UBS conduct.) (RBS Order pp. 14-15.)
Senior Yen Trader: this libor setting is getting nutss
[…]
Bank A Trader: im puzzled as to why 3m libor fixing not coming off after the FED action
[…]
Bank B Trader: [UBS] is lending dolls through my currencies in 3 month do u see him doing the same in urs
[…]
Senior Yen Trader: yes[,] he always led usd in my mkt[,] the jpy libor is a cartel now
[…]
Senior Yen Trader: its just amazing how libor fixing can make you that much money
[…]
Senior Yen Trader: its a cartel now in london[.] they smack all the 1yr irs ..and fix it very high or low
December 5, 2007: (Emphasis added.) (RBS Order p. 15.)
Yen Trader 2: FYI libors higher again today
[…]
Yen Trader 4: ‘ucksake. keep ours low if poss. don’t understand why needs to go up in yen
Yen Trader 2: no reason dude[,] [Bank C] and [Bank D] went high yest
Yen Trader 4: send the boys round
[…]
Yen Manager: pure manipulation going on
April 2, 2008: (Emphasis added.) (RBS Order p. 10.)
Senior Yen Trader: nice libor[.] our 6m fixing move the entire fixing[.] hahahah
Yen Trader 1: the BBA called to ask me about that today
Senior Yen Trader: really?
Yen Trader 1: yes
Senior Yen Trader: they complain?
Yen Trader 1: asked to speak to me about the low 6m rate
Yen Trader 1: no[,] just to make sure i was happy with it
[…]
Senior Yen Trader: i think some banks must have complain
Yen Trader 1: he called b4 any of the other banks saw our data[,] at about 11.15[,] to check it was ok
Senior Yen Trader: oh then its fine
Yen Trader 1: before publishing
Senior Yen Trader: i am sure some HF [hedge fund] will complain tomorrow ..
Yen Trader 1: tough
Senior Yen Trader: we will say we lower every tenor ..1m 3m 6m ..we feel rbs name has very good credit ..no problem getting money in
Senior Yen Trader: good way to boost share price!
Senior Yen Trader: our 3m libor is at top end …6m at bottom end …just the ideal level!
September 3, 2009: (RBS Order p. 9.)
Senior Yen Trader: [Yen Trader 6], can you ask [Primary Submitter] to drop 3m Libor by 1 bps? hold 6m libor unchange [sic] thanks
Yen Trader 6: Yes[,] going over to his desk now[,] yup, 6s going unch, 3s will drop by 1
Senior Yen Trader: domo
September 14 and 15, 2009: (Emphasis added.) (Primary Submitter agrees to switch direction of submissions over two consecutive days.) (RBS Order p. 16.)
September 14:
Yen Trader 1: high 3s and 6s please
Primary Submitter: ok
September 15:
Yen Trader 1: can we lower our fixings today please [Primary Submitter]
Primary Submitter: make your mind up[,] haha , yes no probs
Yen Trader 1: im like a whores drawers
Yen Manager’s Participation
August 22, 2007: (RBS Order pp. 10-11, 18.)
Yen Manager: Hi Mate, where are u calling the 6m and 3s Libor today ?
Yen Trader 1: i put in 1.05 and 1.15
Yen Manager: ok cool...is that close to consensus ?
Yen Trader 1: i think my 3s are too high[,] 6s will prob be 1.13 too[,] but i wanted high fixes today
Yen Manager: ok cool[,] its all a random variable for us at this stage it is just we have some small fixings
Yen Trader 1: well let me know if you have any preferencves [sic][,] each day
Yen Manager: thx will do
December 3, 2007: (RBS Order p. 11.)
Yen Manager: for choice we want lower libors...let the [Money Market] guys know pls
Yen Trader 2: sure i am setting today as [Yen Trader 1] and cash guy off [Primary Submitter]
Yen Manager: great set it nice and low
Yen Trader 2: 1.02 in 6m or lower
Yen Manager: yeh lower
Yen Trader 2: 1.01 then cant really go much lower than that
Yen Manager: ok
Yen Trader 2: u care for 1m and 3m too[?] looks to me like fra map pretty flat
Yen Manager: lower generally dude
Yen Trader 2: cool
Yen Manager: within the acceptable bounds
Yen LIBOR Collusion With UBS:
February 15, 2007: (RBS Order p. 20.)
Yen Trader 2: how many people can u get to put this 1m libor low
UBS Yen Trader: well us[,] [Bank E,] and a few others i think
February 21, 2007: (RBS Order p. 20.)
Yen Trader 2: what ur guys calling 3s libor[?] we need to get some low fixes
UBS Yen Trader: .64[,] yes will ask for low low high[,] 1m 3m 6m
Yen Trader 2: our guy agrees but reckons it will be 67[,] not good
UBS Yen Trader: no way!
[…]
UBS Yen Trader: […] make sure your boys set low 1m and 3m
Yen Trader 2: will try though [Yen Trader 1/backup Yen LIBOR submitter] wants high 3s and 6s
UBS Yen Trader: we want high 6’s too? don’t let [Yen Trader 1] keep 3m high to help [Senior Yen Trader][,] i hate that guy
May 7, 2008: (RBS Order p. 21.)
UBS Yen Trader: Hi [Sterling Cash Trader] if this is you can you pls ask for a low 6m in jpy for the next few days[.] Hope you are ok, was good seeing you last week[.] Cheers [UBS Yen Trader]
Sterling Cash Trader: Hi mate, I mentioned it to our guy on Friday and he seemed to have no problem with it, so fingers crossed.
Swiss Franc LIBOR Manipulative Conduct Within RBS:
December 4, 2008: (Emphasis added.) (RBS Order p. 25-26.)
Swiss Franc Trader: can u put 6m swiss libor in low pls?
Primary Submitter: NO
Swiss Franc Trader: should have pushed the door harder
Primary Submitter: Whats it worth
Swiss Franc Trader: ive got some sushi rolls from yesterday?
[…]
Primary Submitter: ok low 6m , just for u
Swiss Franc Trader: wooooooohooooooo[,] 0.01%? thatd be awesome
Primary Submitter: 1.33
Swiss Franc Trader: perfect[.] u r a nice man
January 30, 2009: (RBS Order p. 26-27.)
Swiss Franc Trader: high 3m libors pls!!!!!!
Primary Submitter: 0.50??
Primary Submitter: 0.51
Primary Submitter: 0.52
Primary Submitter: 0.53
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: and low 6m
Primary Submitter: Ok i get ya
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Primary Submitter: ok
Primary Submitter: libors as requested
Swiss Franc Trader: you a top dog
May 5, 2009: (RBS Order p. 27.)
Swiss Franc Trader: can we get high 3m, low 6m pls!
Primary Submitter: maybe
Swiss Franc Trader: PPPPLLLLLEEEEEAAAAASSSSEEEEEE
Primary Submitter: ok 41 52
Swiss Franc Trader: perfect perfect
May 14, 2009: (Emphasis added.) (RBS Order p. 28-29.)
Swiss Franc Trader: [Primary Submitter] pls can we get super high 3m[,] super low 6m
Swiss Franc Trader: PRETTY PLEASE!
Primary Submitter: 41 & 51
Swiss Franc Trader: if u did that[,] i would lvoe [sic] u forever
Primary Submitter: 41 & 55 then …
Swiss Franc Trader: if u did that i would come over there and make love to you[,] your choice
Primary Submitter: 41+51 it is
Swiss Franc Trader: thouht [sic] so
Primary Submitter: so shallow
RBS Collusion With Interdealer Brokers:
June 26, 2009: (Emphasis added.) (RBS Order p. 24.)
Interdealer Broker B: Hello mate, [Yen Trader 1]? You all set?
Yen Trader 1: Yeah.
Interdealer Broker B: Right listen we’ve had a couple of words with them, you want them lower right?
Yen Trader 1: Yeah.
Interdealer Broker B: Alright okay, alright listen, we’ve had a couple words with them. You want them lower, right?
Yen Trader 1: Yeah.
Interdealer Broker B: Alright okay, alright, no we’re okay just confirming it. We’ve, so far we’ve spoke to [Bank F]. We’ve spoke to a couple of people so we’ll see where they come in alright. We’ve spoke, basically one second, basically we spoke to [Bank F], [Bank G], [Bank H], who else did I speak to? [Bank I]. There’s a couple of other people that the boys have spoke to but as a team we’ve basically said we want a bit lower so we’ll see where they come in alright?
Yen Trader 1: Cheers.
Interdealer Broker B: Cheers no worries mate.
March 3, 2010: (Emphasis added.) (Former Sterling Cash Trader now employed by Interdealer Broker A.) (RBS Order p. 22.)
Former Sterling Cash Trader: can i pick ur brain?
Primary Submitter: yeah
Former Sterling Cash Trader: u see 3m jpy libor going anywhere btween now and imm?
Primary Submitter: looks fairly static to be honest , poss more pressure on upside , but not alot
Former Sterling Cash Trader: oh[,] we hve a mutual friend who’d love to see it go down, no chance at all?
Primary Submitter: haha [former UBS Yen Trader at Bank C] by chance
Former Sterling Cash Trader: shhh
Primary Submitter: hehehe , mine should remain flat , always suits me if anything to go lower as i rcve funds
Former Sterling Cash Trader: gotcha, thanks, and, if u cud see ur way to a small drop there might be a steak in it for ya, haha
Primary Submitter: noted ;-)
Former Sterling Cash Trader: 8-)
RBS Yen Trader Engaged In Wash Trades to Compensate Brokers
September 19, 2008: (RBS Order p. 23.)
Interdealer Broker B: can you do me a favour … you’re not going to get paid any bro for this and we’ll send you lunch around for the whole desk. Can you flat…can you switch two years semi at 5 3/4 , 100 yards [meaning 100 billion] … between UBS. Just get … take it from UBS, give it back to UBS. He wants to pay some bro. We won’t bro you…
Yen Trader 1: Yeah, yeah
[…]
Interdealer Broker B: Yeah. Yeah. 100 yards … actually can you make it 150 and I’ll send lunch around for everybody?
Yen Trader 1: Yeah.
Interdealer Broker B: Thanks very much. Cheers. Cheers, mate and you choose lunch.
Continuing Conduct after Commencement of Investigation:
November 22, 2010: (Emphasis added.) (RBS Order p. 30.)
Senior Yen Trader: hey ...you think we be able to convince [Primary Submitter] to change the libor today?
Yen Trader 1: i can try
Senior Yen Trader: need to drop 3mth Libor and hike 6m Libor he dropped 6m by 2 bps last Friday
Yen Trader 1: at the moment the FED are all over us about libors
Senior Yen Trader: thats for the USD?
Yen Trader 1: ye[]s
Senior Yen Trader: dun think anyone cares the JPY libor
Yen Trader 1: not yet[,] i will walk over ot [sic] them
November 24, 2010: (Reflecting feigned refusal over Bloomberg Chat, immediately followed by agreement in telephone conversation.) (RBS Order pp. 30-31.)
Bloomberg Chat:
Senior Yen Trader: was wondering if it suits you guys on hiking up 1bp on the 6mth Libor in JPY ... it will help our position tremendously
Primary Submitter: how you doing with all the volatilities these days? ... to be honest happy with levels we see at the moment
Senior Yen Trader: ok no prob ... wouldn’t want to cause any problem ... thanks mate
Telephone Conversation:
Senior Yen Trader: Hello?
Primary Submitter: Morning, [Senior Yen Trader]? Hi, [Primary Submitter].
Senior Yen Trader: Yeah, how are you?
Primary Submitter: I’m pretty good sir. Very Good. We’re just not, we’re not allowed to have those conversations on [instant messages].
Senior Yen Trader: Oh, sorry about that. I didn’t know.
Primary Submitter: (laughter)
Senior Yen Trader: (laughter) Oh because of the, the BBA thing?
Primary Submitter: Yes, exactly.
Senior Yen Trader: Ah, ok ok.
Primary Submitter: So yeah, leave it with me, and uh, it won’t be a problem.
Senior Yen Trader: Ok, great.
(9 votes)
- advertisements -
»
- 9111 reads
- Printer-friendly version
- Send to friend
Do you know where your Libor is?
"who me!"
"I did not have sex with that woman!"
What is your definition of "is"?
Bullish!
I recently found myself in London for business for the first time in years and was able to immediately confirm that I made the correct decision not to visit at all during the last 10 years. I hope I do not need to return for another 10 years, unless I get my dream job – Head Banker Executioner of the Revolution, which would involve a lot of first class travel between New york and London to make sure the guillotines are well greased and the blades dull and rusty. Now that would be a 9-5 that I would commute to with a smile on my face every day.
http://www.singledudetravel.com/2013/01/london-is-for-wankers/
Indeed. I wonder how a concealed carry might impact that choice regarding paying that fare or walking?
Indeed, fuck London and the British sheep.
I was dead wrong: We desperately need armed drones.
Yeah, the kind of women you find in abundance in bars or discos in London is not the most impressive out there. They seem to be trying to overcompensate for something and think that getting a fat ass in an ultra short-skirt, a fake tan, tons of war paint and 10 inch high-heels make them look sexy. Mind you, women in London are thinner and in better shape in average than anywhere else in the UK.
The really interesting ones are to be found in different circuits, but they often suffer from this strange lack of self-confidence which they cover up by being a bit fake and a bit of a poser (hence giving out a feeling that they're distant).
Somebody once told me that British women are taught to be weak and, looking around me, I'd say it's probably true. Certainly here in London most of the really interesting and relaxed women are foreign.
Damn, now I miss Holland and Dutch women :(
All this "is" is a shakedown from one crook by another crook
Why worry about the worry, why worry about the problem, when the century city just had to be comingggg.
You thought that was a woman?!
How dare they do what central banks do all day!!?? The got some nerve! /sarc
They should not only get fined, they should have to return the ill gotten profits as well.
return to who? the gov'mint?
an interesting thing is, initially it was well reported that the banks did this to sweeten up largest macro hedge funds.. Brevan, Moore, etc. however those crooks so far managed to keep their names out of the funny pages.
Ya know, that picture says everything>
Riot police guarding the RBS building form the peasantry.
Not a joke anymore.
No wonder they're buying a bazillion rounds of...
You get the drift...
Why?
"They didn't break any laws".
No doubt the traders involved "no longer work for the firm" (aka "they now work for Barclay's across the road").
Said otherwise, until one of these wonderful manipulative creeps is beheaded demonstratively (either figuratively or literally) in the town square, nothing will ever change.
Hmmm...I still respectfully disagree with ZH's editorial line on this issue.
What exactly is or should be different now? Is the LIBOR fixing process all patched up? If there is little to no actual interbank lending activity during the period in question what number is the honest and compliant trader supposed to quote - only levels that don't work to his/his desk's advantage?
What would the non-false levels have been in the above examples and what rock-solid data should they have been tied to?
This whole half-assed system should be scrapped and replaced with something else. The big story here isn't The Evil That Traders Do but how a system with perverse incentives and tight bottlenecks is just not the way to go.
Also, as I've pointed out before, the above dialoge seems to indicate that this scandal is almost certainly about manipulation with individual/desk/department profit in mind, not the bottom line of the particular mega-bank as a whole. Surely "artificially" goosing LIBOR upwards hurt some other line of business within Barclays/RBS etc even as it helped the P&L of the above traders/desks.
Reading the quotes, one of them seemingly agrees with your proposition. The guy says that all things being equal, he prefers rates lower as he is at a bank that receives funds. The Libor submissions should perhaps be based on a bid/offer spread. The current system does suck, and you're correct to point out the incentives as the root problem.
the O in LIBOR is an offered rate. LIBOR is and always has been an indicative rate. it is not a rate that has necessariy beentraded. it is where a bank of reasonable standing thinks it can borrow money. LIBOR is the average of the middle 24 of 32 OFFERED rates.
if a bank is receiving it wants a higher rate. a paying bank wants a lower rate.
LIMEAN would be just as meaningless as LIBID as LIBOR for actually trading cash or swaps.
just like saying i will lend you money based on an 11 am rate rather than what Joe six pack borrowed at 9 am or 3 pm in five times normal market size.
In the mean time, ratings agencies are being taken to court. Corzine walks free. Politician and the elite lie at will. Wake up and smell the coffee sheep. You don't live in a "just" society.
And of course, the heads of these banks were shocked, SHOCKED, to hear this was going on. /sarc
Until heads of banks are put in 'pound me in the ass prison' at a multiple of Madoff's sentence, there will be no retribution fitting of the crime.
Until then, this is but window dressing that does nothing to help instill faith in a morbidly corrupt system.
I'm in favor of a revival of that wonderful practice of tarring and feathering. Also, drawing and quartering. I think those assholes would cut that shit out posthaste once they see a couple of their buddies get torn apart by horses.
The head of the FSA (the UK banking and financial regulator), that was there when all this was going on and did nothing (and apparently, at least the Bank of England was aware and activelly encouraging LIBOR underreporting at some point), has recently (after LIBOR became widelly known) been given a Knighthood (he's now Sir Hector Sants) and went to work for Barclays.
I think this says all there is to say about corruption and accountability in the UK.
[PS: Bet he go the knighthood "For Services to Banking"]
They lied..they made huge money...they pay a little fine....they wink wink...and life goes on....NO ONE GETS CHARGED WITH ANYTHING..life is good if you are a banker
Interdealer Broker B: Cheers no worries mate.
As blatantly obvious and repugnant as this fraud is, it will get all sweeped under the rug and no mention will be made in the MSM. Nothing to see here, just go on about your business.
Hundreds of trillions in stolen wealth and a not even a billion dollar fine.
Like I said before, nothing changes until there are some real consequences for bad behavior.
Roll the fucking guillotines already.
just amazing. we are living in a strange world where those people sharing this will be in much greater danger than people actually doing it.
Fire the whole bunch of them with no compensation and jail time!
If they are doing consistant business at LIBOR rates, they should lose money or marketshare by rigging it. It should hurt their real operations. If they are not doing business using LIBOR, what business do they have submitting anything to do with it?
they are not talking about trading..LIBOR is a fixing. Only idiots trade at 11 am LIBOR fixings and don't negotiate rates.
the big issue is the pricing (mark to market) of P/L of SWAPS and the flow of collateral (cash for short dates, bonds with little or large haircuts for long dates).
swaps are the 1 quadrillion gorilla and cover all currencies and deposit tenors going out from overnight to 50 years.
the largest users of swaps are corporates and pension funds plus the prop book. it is these people who exchange real collateral flows based on LIBOR fixings and it follws it is these people who make or lose real money.
it is here where collateral managment aggs the big bucks via repo and other methods of rehypothecation. the LIBOR rate setters aren't even fully aware of the results of their actions.
note that you need to follow the cash earned on collateral managment to get to the real truth.
bps here and there don't seem much. but when you have a maturity ladder running to billions (trillions in JPM, RBS and UBS's case) they are significant.
Fine the English taxpayers.
Now you're gettin the idea
Crony capitalism bitchez!
White collar crime certainly pays.
I have a hard time figuring out the downside. Just make sure you pay off your politicians well and then rape and pillage to your heart's desire. Then just plead ignorance if you get caught, and your politician buddies will make sure it goes away.
The downside is a beheading in the revolution that occurs when the greed goes too far.
That's the same as giving money to a murderer and telling them not to kill anyone again
Yea but it's only foriegn banks. Of course JPMorgan and Goldman weren't involved.
This should be a lawyers wet dream. Where are all the class action lawsuits?
Some have already been filed. There will undoubtedly be more.
Fuck you UBS. You scum deserve nothing less than slow fucking death.
A big fuck you CFTC and Bart Chilton for bending over and fining them the equiv of one UBS fucker bonus.
Eat fucking shit CFTC you fucking limp fucking pricks.
That should be enough to keep the CFTC running for another year. That's the whole idea, isn't it?
"Thanks Mr. Gensler. Let us know when you're ready to do it all over again."
The Management at (fill in the TBTF bank of your choice).
"misconduct"
What?
Criminal activity is the correct term
So let me see if I get this straight. Get accused of selling drugs and you automatically forfeit all of your property to the governement, even before the case goes to trial. Steal $616 billion and you get a 5% fine?
what's your point? bankers always leave large tips, are sober/drug free, treat their wives well, give up their seats on trains and put the toilet seat back down when they piss in the bowl when the urinals are busy.
"Senior Yen Trader: we will say we lower every tenor ..1m 3m 6m ..we feel rbs name has very good credit ..no problem getting money in
Senior Yen Trader: good way to boost share price!"
I'm sure it was just a case of someone forgetting a /sarc tag.
Ahh, our lovely bankers. And this, from MarketWatch. This is the first article I have seen on MSM that tells it like it is on their site. Maybe there is hope. I actually thought Tyler posted this but here it is. Great piece.
FINANCE
So God made a banker
'
'
'
'
Anybody think this is gong to expand into the Canadian banks?
•J•
V-V
Canadian banks are immune to the financial woes of the world. Do not forget that all Canadians, especially the bankers, are honest, hard working and demonstrate the moral fortitude of saints. It is clear that what needs to happen is that more Canadians, like our good banker Mark Carney, need to be at the helm of the world's private and central banks. This is the only viable solution at this point...
Sorry, was channeling my inner Globe and Mail "reporter"...