EU antitrust chief sees decisions in Libor probe by end of year

WASHINGTON, April 12 Fri Apr 12, 2013 2:54pm EDT

WASHINGTON, April 12 (Reuters) - Europe's competition authority should have its first decisions by the end of the year in an investigation of alleged manipulation of key international interest rates, EU Competition Chief Joaquin Almunia said on Friday.

Regulators in Europe, the United States and elsewhere have been looking into charges that traders fixed the interest rates offered on the Euro Interbank Offered Rate (Euribor) and London Interbank Offered Rate (Libor). The loans were denominated in dollars, euros and in the Swiss franc.

"We are investigating collusive actions, some cartels, linked with the manipulation," Almunia, whose office enforces antitrust law in the European Union, told the American Bar Association.

Almunia's probe is civil, although a parallel probe in the United States is criminal.

If Europe's investigation continues at its current pace, some preliminary decisions should be made by the end of the year, he said.

The Libor probe is a top priority, Almunia said. "It is absolutely needed to regain confidence in these benchmarks that are essential for the functioning of the economy."

European authorities are also looking at potential manipulation of interest rates offered in the Tokyo Interbank Offered Rate in Japan, but that probe is not as far along, he said.

Euribor and Libor are the key gauges of how much banks pay to borrow from each other. They are used as reference points for many financial products, ranging from Spanish mortgages to derivatives contracts sealed in London. Both are set using interbank borrowing rates submitted by banks.

Three banks have reached settlements with authorities to date. Royal Bank of Scotland agreed to pay $612 million to U.S. and British authorities. UBS agreed in December to pay $1.5 billion. Barclays agreed to pay $453 million in June.

Watchdogs in Japan, Canada, Italy, Germany and the Netherlands are also scrutinizing the issue.