Dutch bank Rabobank Nederland, the ultimate parent of rural lender Rabobank New Zealand, says it's among a number of banks being investigated over Europe's Libor and Euribor manipulation scandal.
The bank made this disclosure in its interim financial results announcement.
"Government authorities in various jurisdictions are investigating a number of banks, including Rabobank, in connection with the Libor and Euribor setting process. Rabobank is cooperating with these investigations. Rabobank will not comment on the regulatory investigations since these are ongoing matters that have not reached a conclusion," the bank said.
Evidence of manipulation has shaken confidence in Libor, Euribor and other benchmarks that underpin trillions of dollars in global financial agreements from residential mortgages to complex derivatives contracts. This comes after Barclays Bank admitted submitting false rates in settlements with both British and United States regulators. Barclays' CEO Robert Diamond was forced to resign, the bank has been fined £290 million (about NZ$566 million) and there's talk of criminal charges with other banks also in the regulatory spotlight.
Meanwhile, Rabobank reported a 29% fall in half-year net profit to €1.3 billion (about NZ$2 billion). Total assets rose 5% to €770.898 billion and return on equity fell 3.9% to 6.9%.
Chairman Piet Moerland said the first half of 2012 came with ups and downs for Rabobank.
"The market showed further decline, not least in the Netherlands, our home turf. European banks specifically are faced with having to weather the economic downturn, while the outlook for recovery is fragile. The debt crisis continues to cause uncertainty in the financial markets. That said, the direct effect on Rabobank is limited: at €252 million, we have only minor exposure to government bonds issued by GIIPS (Greece, Ireland, Italy, Portugal and Spain) countries."
"The challenging economic climate is reflected in an increase in value adjustments (or write-downs by €478 million, or 77%, to €1.1 billion). Combined with lower interest income and an increase in operating expenses, this resulted in a 29% drop in net profit against the first half of 2011."
"Rabobank’s solvency and liquidity positions continue to be strong. Boasting €45 billion in equity, Rabobank is one of the best-capitalised banks in the world. Higher solvency levels will make the banking sector more robust. Financial returns are not the highest priority for a cooperative (like Rabobank), but they are needed to be able to meet future market demand for loans and thus continue to offer excellent client services," said Moerland.
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