TOKYO (Reuters) - Japan’s financial industry watchdog ordered Royal Bank of Scotland’s (RBS.L) Tokyo unit to bolster compliance on Friday, becoming the latest global regulator to punish the bank in the wake of a interest rate rigging scandal.
In a statement RBS Securities Japan Ltd apologized to its customers and said that its head Ryusuke Otani would leave the firm and be replaced by Shoji Toby Taniguchi.
The Financial Services Agency ordered RBS Securities to shore up its compliance after finding employees had sought to manipulate interest rates to profit on derivative trades, calling its conduct “seriously unjust and malicious”.
The Japanese watchdog’s directive is the latest punishment meted out by a regulator following the eruption of an industry-wide scandal over the rigging of The London Interbank Offered Rate (Libor) and other benchmark rates last year.
RBS was fined $612 million by U.S. and British authorities in February to settle allegations it manipulated benchmark interest rates. As part of that settlement, RBS’ Japan unit agreed to plead guilty to one count of wire fraud in relation to yen Libor.
RBS Securities said it would undertake a comprehensive review of its governance structures in Japan.
The FSA’s order requires RBS to bolster compliance and periodically report back to the regulator on its progress. The order did not include a suspension of operations or other penalties that could have had a more direct hit on its business.
Reporting by Nathan Layne; Editing by Edwina Gibbs