Euribor setback as Dutch bank quits

Rabobank became the highest profile European bank to quit money market benchmark Euribor yesterday, dealing the credibility of the lending rate a fresh blow as its future remains uncertain.

The Dutch cooperative, one of Europe’s highest-rated banks, confirmed it had quit the more-than 40-strong Euribor panel after data showed it did not submit a contribution.

“The changed circumstances on the money market have strongly affected Rabobank’s business,” it said in a statement.

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“As a result, Rabobank evaluated its contribution to the Euribor panel from a business economics point of view.”

There was a second blow as German Landesbank Bayern said it had also withdrawn from Euribor, effective from the start of 2013, for “strategic reasons”.

Euribor and its larger counterpart Libor are Europe’s key gauges of how much banks pay to borrow from their peers, and underpin swathes of financial prod- ucts.

But their future is in doubt after it emerged last year that a number of banks had manipulated the benchmarks for their own advantage in the past.

The Libor scandal toppled the leadership of Barclays and cost UBS $1.5bn in fines last year. Other banks are also bracing for huge fines and the possibility of criminal charges against bankers and executives.

Rabobank’s is the highest-profile European departure from Euribor to date and comes after Citi, one of the world’s biggest financial institutions, and Germany’s Dekabank quit last year.