Post date: Jun 28, 2012 7:52:46 AM
U.K. bank Barclays will pay $453 million to U.S. and British authorities to settle allegations that it manipulated key interbank lending rates known as Libor, ramping up pressure on other banks to cooperate in a probe that could cost the financial industry billions of dollars.
UK-BARCLAYS LIBOR - Another scandal surrounding the banking industry.
This time Barclays is made to pay 453 million dollars to the US and British authorities to settle allegations that it manipulated interbank lending rates.
Barclays admitted trying to make the so-called Libor rates look artificially low to avoid signalling the bank's distress to markets between 2005 and 2009.
Nicholas Dunbar is author of The Devils' Derivatives.
NICHOLAS DUNBAR, AUTHOR "THE DEVILS' DERIVATIVES" SAYING:
"What's happened is that the people in the casino - the derivatives traders wt. their trillions of bets are across the wall and are influencing the rate which is supposed to be old fashioned interbank lending and it has been completely contaminated by these traders and you see these emails quoted in the FSA report saying here's a bottle of Bollinger for doing this for me, dude. big boy - it's all there in black and white."
CEO Bob Diamond was head of Barclays Capital at the time.
He said he was sorry for the bank's actions and said he and senior executives would forgo a bonus this year
Andrew Tyrie is Chairman of the UK's Treasury Select Committee.
ANDREW TYRIE, CHAIRMAN, UK TREASURY SELECT COMMITTEE, SAYING:
"This is appalling. I was deeply shocked by it. Once I had read the FSA report - the final notice - which I've just done, it beggars belief."
Libor under pins trillions of dollars in derivative contracts.
It's also a crucial peg for corporate borrowing rates worldwide.
The manipulations meant that millions of borrowers globally paid too little or too much interest on their debt.
The UK's Financial Services Agency took part in the investigation.
The fine reflects the seriousness of the case - it's the largest ever imposed by the FSA.
And a criminal investigation by the US justice department is still in progress
Sonia Legg, Reuters.