Canada’s competition watchdog is being criticized by British bankers over its handling of an international investigation into interest rate fixing.
Royal Bank of Scotland says the Canadian Competition Bureau has not respected British law in trying to force the bank to produce documents relating to fixing of the London interbank offered rate, or Libor.
RBS, which is one of more than a dozen banks who contribute to setting the benchmark interest rate, said it can’t produce the documents the Competition Bureau has requested because it would run afoul of British privacy laws, since the material involves client data.
A spokesperson for the bank said the Competition Bureau needs to ask the British government to compel the bank to produce the material, which would nullify privacy concerns. Similar to a court order, the bank can be forced to produce documentation by the government, without running afoul of such laws.
Though regulators from several countries including the United States have taken such steps, Canada’s competition bureau has not, the RBS spokesperson said.
Contacted by the Globe on Thursday, the Competition Bureau would not say why it hasn’t approached the British government. “We must keep the details of our investigation confidential,” a Bureau spokesman said in an e-mail.
The Competition Bureau and RBS got into a spat this week over the probe, with the Bureau saying on Wednesday that RBS is refusing to co-operate with its probe. The Bureau put out a statement disputing claims the British bank made to shareholders that it is “co-operating fully” with an investigation into Libor rate fixing.
“The suggestion that the RBS Group is ‘co-operating fully’ with the Bureau is false. The RBS Group has not applied to the Bureau’s Immunity or Leniency programs and, in fact, has challenged a production order issued by the Ontario Superior Court of Justice in relation to the Bureau’s investigation,” the Bureau said.
However, RBS said its hands are tied unless the Competition Bureau simply approaches the U.K. government to deal with the privacy concerns.
When asked why Canadian authorities haven’t taken the same steps as regulators from other countries, the spokesman for the Competition Bureau said the watchdog would no longer be providing comment on the RBS matter.
The Competition Bureau was asked by regulators in the U.K. to assist in the international probe by investigating the subsidiaries of U.K. banks operating in Canada, including RBS and others.
Libor, which is a survey of what the banks say is their cost of borrowing, is used to set interest rates for everything from bonds to credit cards and mortgages. More than a dozen banks are being probed for alleged rate-setting in the yen-denominated Libor rate, which may have boosted their profits. No charges have been laid in the investigation.