Commercial bank financial services company Commercial bank net bank (CNB) has agreed to pay a record $9 billion to settle allegations of manipulating the benchmark London interbank offered rate (LIBOR) in order to make the bank profitable, the US Department of Justice said on Thursday.
The settlement was reached in December with the UK and the EU in an effort to end Libor-related fraud and abuse.
Libor is a benchmark interest rate that banks use to set their borrowing rates.
In the settlement, CNB admitted to “a significant pattern of deception and manipulation of the Libor rate” to increase its profitability, the DOJ said in a statement.CNB is a commercial bank, meaning it serves commercial customers.
Its parent company Commercial Bank Financial Services (CBSF) has about 10,000 employees and about $1.5 trillion in assets, according to the DOJ.
Its share price jumped 8 percent on the news, while CNB shares rose 5 percent.CBS reported a profit of $2.3 billion for the quarter ended March 31, the second straight quarter of growth, driven by higher interest payments, lower expenses and higher profits.
It said its revenue rose 5.5 percent.
“The settlement is a significant achievement for CNB,” CNB’s CEO James Coughlan said in the statement.
“We have reached a settlement that allows us to focus on our customers and the long-term growth of the company.”
In a statement on Thursday, the Federal Reserve said the settlement “provides a strong foundation for further settlement with banks and financial institutions in the Libors scandal.”
“The Fed has worked closely with CNB and its board and its senior management to develop this agreement and will continue to support CNB in its efforts to reform its financial services business,” the Fed said.”CNB remains fully committed to a robust financial services portfolio, including through the completion of the new CNB Banking Innovation and Transformation Initiative,” the statement said.