It sounds like such fun. A Royal Bank of Scotland trader quips "hahaha" in a series of jovial electronic exchanges as he goes about his work.
But it will soon become clear that however much fun the trader felt he was having, the repercussions for the bailed-out bank will be anything but when it is hit with a staggering £500m or so in fines for manipulating Libor.
Ever since Barclays was fined £290m in June for rigging the benchmark interest rate, Stephen Hester, the RBS chief executive, has been softening the ground for the bailed-out bank to suffer a similar – or worse – humiliation by regulators on both sides on Atlantic.
Hester's counterpart at Barclays, Bob Diamond, was forced out within days of the Libor fine being announced in June but the RBS chief executive will be hoping to secure the support of regulators even though the fixing of Libor appears to have carried on for another two years after he was parachuted in during October 2008.
But top managers at the RBS investment bank, including its chief executive John Hourican, who it has since emerged was planning to leave after reshaping the business – may quit to take responsibility for the disregard shown for the market even though they are not personally culpable. The head of global trading, Peter Rading – whose controversial redevelopment of his Hampstead home emerged last week – resigned on Friday for personal reasons and although the timing could prove helpful for RBS, there is no suggestion he was personally involved.
While the evidence published by the Financial Services Authority (FSA) and US regulators as they announce the fine will not name individuals, it will shine a light on the way traders fixed an interest rate used to determine borrowing costs of $300tn (£189tn) of financial contracts – ranging from mortgages to loans for big companies – around the world.
An indication of the type of evidence is provided by documents filed in a Singapore court by a former RBS trader – Tan Chi Min – who is bringing a case of wrongful dismissal on the basis that the bank condoned the manipulation of Libor. First reported by Bloomberg in September, the 231 pages of filings in the Singapore court show that Tan sent an instant message in April 2008 saying: "Nice Libor … our six month fixing moved the entire fixing hahaha".
In other messages he describes Libor as a "cartel" and discusses how a hedge fund will be "kissing" another trader if the rate can be brought down, evoking memories of the promises by Barclays' Libor traders to deliver bottles of Bollinger champagne for shifting the rate.
By the time regulators began to investigate Libor in May 2011 Tan was asking in a quick, informally written instant message: "Question is what is illegal? If making money if bank fix it to suits its own books are illegal … then no point fixing it right? Cuz there will be days when we will def make money fixing it".
The way Libor is set is being overhauled but when the offences took place dozens of banks submitted the price at which they thought they would be charged to borrow from each other in 10 different series of currencies and across 15 borrowing periods up to one year. It proved to be easy to manipulate and was regarded as such a low-risk business that few senior managers paid much attention to it.
Swiss bank UBS has so far incurred the largest fine, £940m, in a regulatory action announced last month which for the first time lifted the lid on payments made by traders to the interdealer brokers that help the banks decide what price to submit to the Libor panel.
The FSA has several other cases under way, the Serious Fraud Office is also investigating the process while the US has charged two traders. RBS, a bank into which the UK taxpayer has pumped £45bn, is a target for politicians still facing an electorate angered by the impact of the banking crisis, which ironically had begun to put a focus on Libor.
During the most fraught days of the financial crisis the submissions made by banks to the Libor panel began to be scrutinised for signs of those that might be in distress – a higher rate might indicate that rival banks were charging higher interest rates because they had doubts about a particular bank's financial strength. This came to light during the Barclays case when it emerged that there was some confusion about whether the Bank of England deputy governor Paul Tucker had been encouraging Barclays to reduce its Libor submissions during the 2008 crisis. Diamond's senior colleague Jerry del Missier also ended up quitting as he allowed staff to lower Libor submissions – seemingly believing that was what regulators wanted – and a series of parliamentary hearings tried to establish if policymakers had been involved.
Hester will argue that his focus in the early days of the crisis was on bringing RBS back from the brink, rather than on Libor. After the Barclays fine last summer, as he admitted RBS was in the frame, Hester said: "Even though when all the Libor [fines] are out most of it is going to be around the wrongdoings of a handful of people at a number of banks. Those wrongdoings taint a whole industry beyond the handful of people and that makes it a huge problem."
The bank will want to show that action has been taken.
Four people have been fired. The head of rates trading for European and Asia Pacific Jezri Mohideen – who told Bloomberg he had not pressured colleagues to change Libor submissions – was suspended in October. The bank will be hoping its actions will be enough to appease the public mood before the scandal moves on to the other financial firms still under investigation.
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