UPDATE 2-Norway banks watchdog says no evidence of rate-rigging
* Regulator calls to strengthen monitoring of rate setting
* Six banks set interbank lending rate in Norwegian crowns
* Investigation triggered by complain from foreign banks (Adds background)
OSLO, April 8 (Reuters) - Norway's banking regulator called on Monday for tighter regulation for setting benchmark Nibor interbank lending rates but said it has found no evidence that the rates have been manipulated.
Norway's central bank has said some foreign banks have complained about suspected manipulation of Nibor, the Norwegian Interbank Offered Rate, which many bonds are linked to. It has refused to disclose the names of the lenders.
Some of the world's biggest banks are embroiled in compensation claims totalling billions of dollars following a rate-rigging scandal over the UK equivalent London Interbank Offered Rate (Libor), a benchmark at the heart of more than $550 trillion in financial products.
"The Financial Supervisory Authority has found no evidence that the Norwegian reference rate - Nibor - was manipulated, or of attempted manipulation, but neither can it confirm that this was not the case," it said in a statement.
Nevertheless, the authority said Nibor setting should be strengthened and made more robust against possible manipulation, while bank quotes must be open for scrutiny and control.
"A robust system will help to strengthen confidence in Nibor," it added. The authority plans to inspect all banks that participate in Nibor setting in May.
Nibor is set between six commercial banks, DNB, Danske Bank, Handelsbanken, SEB , Swedbank and Nordea.
The finance ministry said in a separate statement it planned to review the need for measures to strengthen the framework of setting benchmark rates in Norway, and to come with the conclusion by the summer.
Norway's central bank, Norges Bank, said although Nibor was a NOK rate, it nonetheless is calculated as a dollar rate swapped into a NOK rate in the forward exchange market.
Because of the mechanical connection, Nibor volatility is higher than for benchmark rates in other countries, and is more open to suspicion of manipulation, the bank added.
Although the central bank has no role in Nibor calculation or its supervision, it called to clarify rules in rate setting to avoid conflict of interest at the banks contributing to Nibor.
"Norges Bank... emphasises that confidence in Nibor submissions may be critically dependent on the knowledge that individuals setting a bank's submission cannot at the same time serve their own interests," the central bank added. (Reporting by Nerijus Adomaitis; Editing by John Stonestreet)
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