Rabobank's profits sag on back of Libor scandalThursday 27 February 2014 12.30
Dutch bank Rabobank today reported a 2% drop in net profit for 2013, hit by a massive fine relating to the Libor rate-fixing scandal and the weak Dutch property market.
The bank said its net profit fell by €46m to €2.01 billion, and sales fell by 4% to €13.02 billion.
"Rabobank Group's results were significantly affected in 2013 by several non-recurring events," said the group, based in the central Dutch city of Utrecht.
This included the "settlement relating to the Libor investigations, which dominated the year 2013," it said in a statement.
Financial regulators in three countries in October fined the bank, the second biggest in the Netherlands, €774m for what the British-based Financial Conduct Authority said was "serious, prolonged and widespread misconduct."
The scandal resulted in the resignation of several top bank managers, including group chairman Piet Moerland who announced his departure from Rabobank shortly after the fine was imposed.
Libor, or the London Interbank Offered Rate, is a global benchmark that is calculated daily, using estimates from banks of their own interbank rates. It underpins the terms of $500 trillion of contracts from mortgages to the cost of corporate lending.
However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their banks seem more secure.
Rabobank said its problems were compounded by the slow recovery of the Dutch property market, and reported a €817m loss by its Real Estate Group.
The bank blamed the loss on "substantial impairments on land holdings and revaluations of land operations and the sharp increase in value adjustments in financing operations."
But it said "the recovery in the housing market appears to be continuing and the outlook for the development of the housing market in 2014 is favourable."
Rabobank warned however it was expecting limited growth in the Netherlands this year, but that "growth will be slowed by a further decline in private consumption."
"Rabobank is optimistic about its long-term earnings outlook," it added.
Rabobank serves about 10 million clients in 48 countries and employs about 55,000 people in total.