LONDON â€" The Dutch lender Rabobank will pay more than $1 billion in criminal and civil penalties to settle investigations by United States, British and other authorities into its role in setting global benchmark interest rates.
The bank is the latest lender to settle charges related to the manipulation of the London interbank offered rate, or Libor. The settlement with Rabobank is the second-largest agreement after the $1.5 billion penalty imposed on UBS related to the interest-rate scandal.
Rabobank will pay a $325 million criminal penalty to the Department of Justice in the United States, as well as $475 million to the Commodity Futures Trading Commission, $170 million to Britain’s Financial Conduct Authority and about $96 million to Dutch authorities.
As part of the settlement, Rabobank reached a so-called deferred prosecution agreement in which it will avoid criminal charges by making changes in its compliance mechanisms, by continuing cooperating with investigators and by avoiding further wrongdoing.
Piet Moerland, Rabobank’s chief executive, also has resigned immediately as a result of the findings in the investigation.
“I fully understand and share the sense of indignation that the findings of the Libor and Euribor investigations will cause,†Mr. Moerland said in a statement. “I wish to send a strong message on behalf of the bank and on behalf of the executive board: we sincerely apologize for, and strongly condemn, this inappropriate behavior.â€
He will be succeeded as interim chairman by Rinus Minderhoud, who has been a member of the supervisory board.
The investigations focused on suspected inappropriate conduct related to Libor and another benchmark rate, the Euro interbank offered rate, or Euribor, between 2005 and 2011.
United States authorities said that derivatives swaps traders at Rabobank and other banks requested that Rabobank employees make rate submissions used in the calculation of Libor and Euribor that would benefit their trading positions. The Justice Department said in court papers that such accommodations were a regular part of the rate-setting process at Rabobank.
Rabobank said that 30 employees were involved in some fashion in the inappropriate conduct. Those employees, if they remained with the bank, have been disciplined and employees who engaged in the most serious conduct are no longer with the firm, Rabobank said.
The bank said it cooperated fully in the investigations and did not sufficiently appreciate at the time the risk associated with Libor and Euribor.
Last week, Britain’s Serious Fraud Office said it had identified 22 individuals at various banks as potential co-conspirators in its wide-ranging inquiry into the manipulation of Libor.
So far, only three individuals have been charged criminally in Britain: Tom A.W. Hayes, a former Citigroup and UBS trader; and James Gilmour and Terry Farr, two former brokers at RP Martin Holdings in London. Mr. Hayes is also facing criminal charges in the United States.
The three have yet to enter pleas in the case.
Barclays agreed to pay $453.6 million in June 2012, and the Royal Bank of Scotland reached a $612 million deal in February. Last month, British and American authorities fined the British financial firm ICAP a combined $87 million for its role.
Citigroup, Deutsche Bank and other banks also remain under investigation by American and British authorities in the matter.
