A review of a key banking process here has outlined widespread attempts to rig the way crucial interest rates are set.
The report from the Monetary Authority of Singapore (MAS) released on friday night, which covered the period between 2007 and 2011, said 133 traders from 20 banks were involved in trying to rig the benchmark rates.
All three local lenders - DBS Bank, OCBC Bank and United Overseas Bank - were on the list, as well as foreign banks including Australia's ANZ, Barclays, HSBC and Royal Bank of Scotland (RBS).
MAS, which spent a year on the review, said the banks had deficiencies in the governance, risk management, internal controls and surveillance systems in their benchmark submissions.
It said that while there was no conclusive finding that the rates were successfully manipulated, the traders' conduct showed a lack of professional ethics.
In censuring the 20 banks, MAS has demanded that 19 of them set aside extra reserves with it at zero interest for a year while they get their house in order.
Holland's ING, British RBS and Swiss giant UBS are putting aside the most, between $1 billion and $1.2 billion each. In total, the amount to be placed with MAS could range from $8.5 billion to as much as $12 billion. Only German bank Commerzbank does not have to deposit extra funds.
The amounts do not constitute fines, but the banks will be hit as they will not be able to use the cash for their own purposes.
The traders fingered by the report were said to have made several efforts to manipulate key benchmarks, including one that affects home loans. The Association of Banks in Singapore said consumers who took up home loans and corporate loans were not affected by the misconduct.
About 75 per cent of the 133 traders cited have quit or have been sacked, said MAS. Those who remain employed have been disciplined with sanctions such as demotions and lost bonuses.
Some cases have been referred to the Commercial Affairs Department and the Attorney-General's Chambers. No crime seems to have been committed based on the available information and evidence, MAS noted.
MAS deputy managing director Teo Swee Lian said last night: "MAS has taken firm supervisory actions against the banks, based on a careful assessment of their respective deficiencies."
The MAS review was prompted by revelations last year that the Libor rate in Britain had been manipulated by traders at Barclays, RBS and UBS - three of the banks cited in the MAS report.
Investigators here looked into how the Singapore dollar interest rate benchmarks, including the Singapore Interbank Offered Rates (Sibor), are set. The investigation involved checking more than 100 million documents.
The report also outlined moves to address shortcomings in the setting of such key benchmark rates, with additional regulation as well as industry measures for a more robust and transparent process.
MAS has proposed new regulations for financial benchmarks, which include criminalising attempts to rig these rates and subjecting the setting of several key benchmarks to regulatory oversight.
Some analysts, such as SIM University finance professor Sundaram Janakiramanan, felt MAS should have gone further and fined the errant banks.
Banks said they have been cooperating with MAS to address the shortcomings. A UBS spokesman said it has been working closely with MAS to address all issues related to the review.
OCBC chief executive Samuel Tsien said: "There were deficiencies found in our rate submission process. These incidences were not systemic or widespread, but we took them seriously. We have taken tough actions to instil greater discipline in this area."
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