October 29 2013
Financial Services Agency
Based on the results (notified on January 30,2013) of the inspection of Rabobank Nederland, Tokyo Branch (hereinafter referred to as the ”Bank”) conducted by the Financial Services Agency (FSA) and the reports submitted by the Bank based on Article 24(1), Article 48 of the Banking Act and Article 56-2(1) of the Financial Instruments and Exchange Act, the FSA today (October 29,2013) took the following administrative action against the Bank in order to ensure sound and appropriate business operations.
Orders based on Article 47(2) and (4) and Article 26(1) of the Banking Act.
(1)Take the following measures to ensure sound and appropriate business operations.
(i)Ensure thorough compliance with laws and regulations by executives and employees.
(ii)Strengthen the internal control system.
(iii)Formulate measures to prevent the recurrence of the problems described in ”2. Reasons for the Administrative Action” hereunder.
(2)Clarify the responsibility of the executives and employees who gave rise to the problems described in ”2. Reasons for the Administrative Action” hereunder, as well as the matters stated in the notice of inspection results and the reporting order based on Article 24(1) of the Banking Act.
(3)Submit a business improvement plan concerning (1) and (2) above, as well as the matters stated in the notice of inspection results and the reporting order based on Article 24(1) of the Banking Act by November 29, 2013, and immediately implement the plan.
(4)Following the implementation of (3) above, sum up the progress and implementation of the business improvement plan and the status of improvements through December 27, 2013, and report on the findings by the 15th day of the following month (1st report), and subsequently submit similar reports every three months by the 15th day of the respective following months, and at any time as needed in consideration of the implementation status, until the business improvement plan is fully carried out.
From around May 2006 to around August 2010, one trader at the Rabobank Global Financial Markets division (at the time; hereinafter referred to as ”Trader A”) and some of his colleagues in the Bank frequently approached Yen LIBOR submitters of Rabobank Nederland and made requests to change Yen LIBOR submissions in order to affect Yen LIBOR in favor of the derivative transactions by Trader A and some of his colleagues.
The above conducts of Trader A and some of his colleagues could undermine the market integrity, considering that Yen LIBOR is a highly important financial index, which serves as a benchmark interest rate for various financial transactions. Therefore, the conducts are acknowledged to be seriously unjust and malicious and have a serious problem from the perspectives of the public interest and protection of market participants.
Furthermore, in light of the fact that the Bank had not implemented the appropriate internal control system to prevent and identify these misconducts and, as a result, the misconducts had been overlooked for a long period of time, it is acknowledged that its internal control system had serious deficiencies.
Financial Services Agency
Tel: +81-(0)3-3506-6000 (main)
Banks Division I, Supervisory Bureau
(ext. 3751, 3398)