Barclays fined £290m for manipulating interest rates
Barclays Bank has been fined almost £300m as part of an investigation into alleged misconduct, which found that the bank attempted to influence interest rates.
Traders worked to change the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) which implicate both consumer credit cards and mortgages, as well as profit levels for derivatives – or payments accounting for trillions of dollars.
Assistant Attorney from the US Justice Department, General Lanny Breuer, explained the seriousness of the particular areas that Barclays attempted to influence. He said: “Libor and Euribor are critically important…because mortgages, student loans, financial derivatives, and other financial products rely on Libor and Euribor as reference rates”.
General Breuer was keen to elucidate the length of time for which the offences had been going on, adding: “For years, traders at Barclays encouraged the manipulation of submissions used to calculate those rates.”
After receiving the £290m fine, Barclays’ chief executive Bob Diamond is said to have waived the right to his bonus amidst widespread calls for his resignation.
Prime Minister David Cameron, when asked if Diamond should indeed resign, responded: “I think the whole management team have got some serious questions to answer. Let them answer those questions first.”
The Government has said, however, that it remains unclear whether UK law would allow for the prosecution of those involved. In the Financial Services Authority (FSA), Libor does not constitute a “qualifying instrument”, meaning that market abuse rules have not been contravened.
As well as Barclays, up to 40 other banks are said to be under investigation over interest rate fixing, including RBS, HSBC and Lloyds TSB.