Updated, 8:37 p.m. | The Dutch lender Rabobank admitted on Tuesday to criminal wrongdoing by its employees and agreed to 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. Its chief executive stepped down immediately.
The bank is the fifth financial firm to settle accusations that its employees manipulated the London interbank offered rate, or Libor. The settlement with Rabobank is the second-largest agreement after the $1.5 billion penalty imposed onUBS related to the manipulation of benchmark rates, which help determine the borrowing costs for trillions of dollars of mortgages, business loans, credit cards and other financial products.
As part of the settlement, Rabobank, which started out as an agriculture cooperative in the Netherlands in the late 19th century and has become the country’s biggest lender, entered into a so-called deferred prosecution agreement, in which it will avoid criminal charges as long as it continues to cooperate with investigators and stays out of further trouble. Rabobank will pay a $325 million criminal penalty to the Justice Department and $475 million to the Commodity Futures Trading Commission, as well as $170 million to the Financial Conduct Authority in Britain and about $96 million to the Dutch authorities.