New Model Adviser - For professional financial planners

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.
6734.55 -16 0.24% 03:11

RBS boss Hester warns of FSA fine over Libor

RBS boss Hester warns of FSA fine over Libor

Royal Bank of Scotland (RBS) chief executive Stephen Hester has warned that the bank will follow Barclays in being hit by a Financial Services Authority (FSA) fine as part of the Libor scandal.

Hester (pictured) told the Guardian he did not know the size of the fine but that a FSA investigation was ‘in process’. ‘RBS is one of the banks tied up in Libor. We’ll have our day in that particular spotlight as well,’ he said.

He added the Libor-rigging scandal was bad for the whole banking sector. ‘Even though when all the Libor [fines] are out most of it is going to be around the wrongdoings of a handful of people at a number of banks. Those wrongdoings taint a whole industry beyond the handful of people and that makes it a huge problem,’ he said.

The looming Libor fine forms part of a series of bad news for the bank, which has paid out more than £25 million to a businessman who claimed the bank mis-sold him an interest rate swap, according to The Sunday Telegraph.

RBS’s Irish subsidiary last week agreed a settlement with Dublin-based businessman David Agar that will involve writing off swaps and loans worth €30 million and covering legal costs of €1 million, according to the paper. Agar had claimed RBS-owned Ulster bank had mis-sold him €87 million of interest rate hedging products linked to a €47 million property loan.

RBS is among a number of banks to have agreed to provide redress to consumers over its sale of the controversial products, following a FSA review of the market.

The bank is preparing to unveil its results for the first half of the year on Friday, and is expected announce a loss of between £1.2 billion and £1.5 billion, according to reports. According to The Sunday Times, it will announce a further £100 million provision to cover the cost of compensating clients mis-sold payment protection insurance alongside those results.

That would take RBS’s total costs related to the PPI scandal to £1.3 billion.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.