RBS employees dismissed as part of FSA probe

published 10 February 2012

Typhon is the name given to the storm-demon which, in one version of Greek mythology, stole Zeus's thunderbolts and wrecked the earth with storms.

The traders which have been dismissed might be cast as modern day Typhons for they are amongst those who set the London interbank offered rate, commonly referred to in markets by its acronym LIBOR', on behalf of the British Bankers Association (BBA) every day before noon.

It may not quite be Zeuss thunderbolt, but it is not far removed, and it certainly does grant the wielder an influence that leaves little to envy of central banks petty monetary levers.

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By some estimates LIBOR, which is derived from a survey of banks conducted daily on behalf of the British Bankers' Association in London, serves as the benchmark for about $360trn of financial products worldwide.

The gross domestic product of the United States of America is a paltry $12trn (close to irrelevant).

Against that backdrop, the Royal Bank of Scotland, the U.K.'s largest government-owned lender, has dismissed at least four employees in connection with a probe of potential interest-rate manipulation, two people briefed on the move said, according to Bloomberg News.

Citigroup and Deutsche Bank are also said to have dismissed, put on leave or suspended traders as part of the investigation, according to two more people, who declined to be identified because they weren't authorized to discuss the case.

For its part, The Times reported yesterday that Icap, "is looking into the conduct of three of its staff in regards to an alleged manipulation of the London interbank offered rate, or Libor. One employee at the interdealer broker has been suspended pending an internal investigation and two others have been placed on administrative leave."

JP Morgan Chase trader in London who was under an internal investigation in the Libor probe left the firm on his own volition two weeks ago, another person said, also according to Bloomberg.

The investigation is being handled the UK Financial Services Authority and the US Securities and Exchange Commission, amongst others.