Factbox: Banks drawn into Libor rate-fixing scandal

Fri Jul 13, 2012 10:09pm EDT

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(Reuters) - More than a dozen banks are under investigation by authorities in Europe, Japan and the United States over the suspected rigging of the London interbank offered rate, a key interest rate used in contracts worth trillions of dollars globally.

Some 16 banks contributed to the setting of dollar Libor rates in 2008, the period at the center of investigations.

So far, British lender Barclays has been the only bank to admit wrongdoing.

Following is what is known about the involvement of the 16 banks.

BANK OF AMERICA

Bank of America is among the banks being investigated, a person familiar with the matter told Reuters last year. The bank did not comment in its 2011 annual report.

It is one of 11 banks accused of conspiring to manipulate Libor in two lawsuits filed by discount brokerage and money manager Charles Schwab.

BARCLAYS

The UK bank has been at the center of a very public storm since U.S. and British authorities fined it more than $450 million last month for its part in manipulating Libor.

The ensuing backlash cost chief executive Bob Diamond and chairman Marcus Agius their jobs. The pair have appeared before a parliamentary committee to testify about what went on at the bank, in a scandal which has drawn in British central bankers and government ministers.

BTMU

The Swiss Competition Commission said in February that Bank of Tokyo-Mitsubishi UFJ was among those it was investigating on suspicion of conspiring to manipulate rates. The Japanese bank did not comment on any probes in its 2011 annual report.

This month, the group suspended two London-based traders as a result of a probe into manipulating interbank lending rates, but the bank said that was not to do with their conduct at BTMU. They had previously worked at Dutch lender Rabobank.

CITI

Citigroup said its subsidiaries had received requests for information and documents as part of investigations in various jurisdictions. The U.S. bank said it was cooperating.

The bank is also subject to a number of private lawsuits filed in the U.S. against banks that served on the Libor panel.

In December, Japan's financial regulator said it would penalize the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had, along with his boss at Citi, attempted to influence the Tokyo interbank offered rate (Tibor).

CREDIT SUISSE

Credit Suisse is one of 12 banks being investigated by the Swiss Competition Commission about alleged collusive behavior among traders to influence the bid ask spread for derivatives tied to Libor and Tibor as well as the rates themselves. Credit Suisse said it was cooperating fully.

DEUTSCHE BANK

The German bank said it was cooperating with investigations in the United States and Europe in connection with setting rates between 2005 and 2011.

It has had civil actions filed against it in the United States related to the setting of Libor.

Germany's market regulator has launched a probe into the bank over suspected manipulation of interbank lending rates, sources have said. Results are expected in mid-July.

German magazine Der Spiegel reported, citing no sources, that two Deutsche Bank employees have been suspended after external auditors examined whether staff were involved in manipulating rates.

HBOS

The bank, now a subsidiary of Lloyds, said it was cooperating with investigations. It has also been named in private U.S. lawsuits related to the setting of Libor.

HBOS said it in its 2011 annual report it was not possible to predict the scope, outcome or impact of the investigations and lawsuits.

HSBC

HSBC has said it received demands from regulators for information in connection with Libor investigations and it was cooperating. It has also been named in lawsuits related to Libor in the United States.

HSBC said in its 2011 annual report that it could not predict the outcome of the investigations and lawsuits.

JPMORGAN

JPMorgan said it was cooperating with regulators and government bodies investigating the setting of Libor, Euribor and Tibor rates, mainly in 2007 and 2008.

It has also been named as a defendant in private U.S. lawsuits over Libor.

LLOYDS

Lloyds said it was cooperating with investigations. It has also been named in private lawsuits in the U.S. related to the setting of Libor.

It said it 2011 annual report that it could not predict the ultimate outcome of investigations or lawsuits.

In May, the bank said two derivatives traders had been suspended following an investigation into possible interest rate manipulation.

RABOBANK

Rabobank said it was cooperating with investigations into possible manipulation of Libor rates. It has also been named as a defendant in a number of civil lawsuits in the United States. Rabobank said it was confident the claims would be held unfounded and was conducting its defense as such.

RBC

Canada's largest bank did not make any comment in its 2011 annual report on its involvement in regulatory probes into possible manipulation of interbank lending rates.

RBS

Royal Bank of Scotland said it was cooperating with investigators, who had requested information.

RBS said members of its group had been named as defendants in a number of lawsuits in the United States. The bank said it had substantial defenses to these claims.

Following a newspaper report last month that it faced a 150 million pound fine, RBS said there could not be any certainty as to the timing or amount of any fine or settlement.

UBS

The Swiss bank said it had been granted leniency or immunity from potential violations by some authorities, including the U.S. Justice Department and Swiss Competition Commission, in return for its cooperation in the Libor manipulation probe. It did not specify what information it was providing.

In December, Japan's financial regulator said it would penalize the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had attempted to influence Tibor.

It has also been the subject of U.S. lawsuits.

WEST LB

The German bank was among those being investigated, a person familiar with the matter told Reuters in March last year.

The bank made no mention of the probes in its 2011 annual report. In July last year it was dropped, at its request, from the panel of banks contributing to daily fixings of Libor for U.S. dollars.

NORINCHUCKIN

The Japanese bank did not mention the investigations into possible Libor manipulation in its 2011 annual report. In April last year it was one of 12 banks sued by Vienna-based asset manager FTC Capital, accused of conspiring to manipulate Libor.

(Compiled by Kylie MacLellan; Editing by Matthew Tostevin)

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Comments (2)
DavidMerkel wrote:
The analysis is here:

http://alephblog.com/2012/07/06/an-analysis-of-three-month-libor-2005-2008/

Jul 13, 2012 12:59am EDT  --  Report as abuse
coochepuma wrote:
All this hoopla and outrage over rigging the LiBor 5 , 10, or 30 basis points is really missing the elephant in the room.  

The “Prime Rate” is really much more relevant to the U.S.  during the past 50 years.  Until more recently the Libor is not even in the picture in U.S. consumer credit. Most credit cards and consumer loans are/were more tied to the “prime rate” which was defined as the “the rate the banks charged to the banks’ most credit worthy customers, such as the AAA companies”.  Since the late 1980′s the banks have been systematically rigging the prime rate by gradually increasing it over time so that it is now almost 300 basis points (3%) over the real “prime rate”, i.e., what the banks really charged AAA companies such as Exxon and Johnson and Johnson.  This is the banks way of picking everyone’s pocket without permission to the extend of billions and billions of dollars every year.  It is the biggest fraud in America.

Our government and the Federal Reserve actually are part of this scheme in that they redefined the definition of “Prime Rate” in the official publications rather than stopping the banks from doing this. You can check this out just by looking at the old publications from the Federal Reserve Interest Rate Series vs. the current ones.

Even attempts to correct this thru the legal system has been unsuccessful as the banks seem to have influence over the courts also (see Lum vs. Bank of America, et al).

Jul 14, 2012 12:29am EDT  --  Report as abuse
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