RBS, the Royal Bank of Scotland, has been fined following investigations into the Libor rate-rigging scandal. RBS now has to pay a fine of 390 million pounds ($612 million in US dollars) to the UK and US authorities, according to multiple media reports. The FSA has revealed that the full fine was £125m. RBS agreed to settle early in the dispute and was awarded a 30 percent discount.
The problem for the UK is that the bank is majority owned by British taxpayers. Taxpayers own 81 percent of RBS, in fact.
UK taxpayers are generally sick to the back teeth of banks, bankers and their bonus payments. Brits tend to blame these people for our economic woes, more than politicians. This is at odds with the US view.
The Libor rate-rigging scandal merely reinforced the general view in the UK that banks and bankers are no longer to be trusted. As British people were informed that the banks were in trouble, and would need bailing out with taxpayers money, bankers were greedily pocketing their agreed bonus payments. Once this was revealed, it left a nasty taste in British mouths.
What did not sit well with most UK taxpayers was the amount of bonus payments and the fact that they were being paid even though the bank had failed. What other industry offers you huge rewards for failure?
Public opinion pushed politicians to raise concerns and in 2012, some top executives from UK banks either did not take their bonus payment or took a reduced amount.
As RBS is partly funded by British taxpayers, news of a hefty fine due to Libor rate-rigging will not be welcomed. Are British taxpayers once more going to have to fork out hard-earned money to keep this bank afloat? If a bank can afford to pay huge bonus payments to its workers, does it really need taxpayer money?
According to the BBC, RBS chairman Sirsaid Wednesday was a "sad day" for the bank. There is no denying that, however, it is also a sad day for the UK. Banking institutions were heavily relied upon in the past and widely believed to be honorable institutions. Recent events have damaged the reputation of banks in the UK, almost beyond repair.
UK Chancellor according to a BBC report. Whether that is practical or not remains to be seen.is adamant that British taxpayers and the government will not bail out RBS this time. The hefty fine will have to be paid by the bank. Osborne insists that customers must not be penalized,
In 2012 Barclays paid a £290m fine for wrongdoing and other banks around the world have experienced similar problems. Little wonder then that western economies are shot to pieces. Banks are at the heart of a country’s wealth, power and economic success. If the banking sector has even the slightest hint of corruption, it could lead a country to financial ruin.
Investigators discovered that RBS had rigged Libor rates between 2006 and 2010. Was this action crucial in the global economic downturn of 2008?
RBS chief executive Stephen Hester said Wednesday that only some staff were involved in the Libor rate-rigging scandal. He also said that it is all in the past. His message is that the current management of RBS is looking to the future and a return to honorable banking.
The problem is most British people do not believe him.