BBC News, 14
March 2014
Some of the
world's biggest banks have been accused of colluding to fix Libor
Libor
scandal
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- Can we ever trust bankers again?
A US
regulator has sued 16 banks for allegedly manipulating the London interbank
offered rate (Libor).
The Libor
rate is used to set trillions of dollars of financial contracts, including
mortgages and financial transactions around the world.
The
regulator said the manipulation caused substantial losses to 38 US banks which
were shut down during and after the 2008 financial crisis.
The sued
banks include Barclays, HSBC, Citigroup and Royal Bank of Scotland.
The British
Bankers' Association (BBA) has also been sued by the regulator - the US Federal
Deposit Insurance Corporation (FDIC).
"BBA
participated in the alleged scheme to protect the revenue stream it generated
from selling Libor licenses and to appease the Panel Bank Defendants that were
members of the BBA," it was quoted as saying by the AFP news agency.
The FDIC
alleged that the banks mentioned in its lawsuit rigged the rate from August
2007 to at least mid-2011.
Other banks
named in the lawsuit include Bank of America, JPMorgan Chase, Deutsche Bank,
Lloyds Bank, Credit Suisse, UBS, and Rabobank.
Growing
pressure
Libor is
the average rate at which banks lend money to one another and is decided on a
daily basis.
Most of the
world's biggest banks contribute estimates to form the Libor.
But there
have been allegations that some have looked to profit from it by understating
or overstating their submissions.
Over the
past two years, regulators across the globe have been investigating the
manipulation of the rate and there have been $3.7bn (£2.26bn) in fines to date.
A string of
international banks and brokers, including Barclays and the Royal Bank of
Scotland, have faced both criminal and civil penalties for their involvement in
the scandal.
Some banks
have also been found to have understated their submissions in the period during
and after the financial crisis.
They did so
in order to avoid the perception that they were having to borrow at higher
interest rates than their peers and might therefore be in financial difficulty.
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