LONDON, March 7 Britain's banking trade
body has no plans to cede oversight of Libor to regulators,
saying it remains fully committed to the interbank lending rates
under scrutiny by global enforcement agencies for signs of
The British Bankers' Association has put its London
Interbank Offered Rate under review after allegations surfaced
in 2008 that banks were rigging the rates to improve their
credit quality during the credit crisis.
It said on Wednesday it was "committed to
retaining the reputation and integrity of BBA Libor" following a
meeting with banks on Monday to "consider future regulatory and
market developments, such as the incoming liquidity rules".
The meeting triggered speculation that the Bank of England
-- which under a planned supervisory shake-up will regulate
banks from 2013 -- could wrest control of Libor, or the London
Interbank Offered Rate. The rate is compiled and distributed for
the BBA each day by global news and information provider Thomson
Reuters, from the trade body.
The Bank of England had no comment.
The rate is the benchmark for around $360 trillion worth of
financial contracts worldwide. It is designed to reflect the
likely rates at which top banks could borrow money from each
other each day in 10 major currencies and for 15 borrowing
periods ranging from overnight loans to 12 months.
But the rate is purely notional and, as the credit crisis
raged, allegations started mounting that Libor no
longer reflected reality. This has increased calls for the
benchmark to be overhauled.
"The Bank of England will, I think, take an active oversight
role," noted one economic consultant, who declined to be named.
At present the setting of the rate is not directly regulated
by supervisors, although the individual contributors are.
The regulatory probes, which span from the United States
across Europe to Japan, have been expanded to include
interdealer brokers and whether attempts were made to manipulate
the Tokyo and euro interbank offered rates, Tibor and Euribor.
Societe Generale, France's second-largest bank,
said it had become the latest bank to have received requests for
information from U.S. and European regulators about both Libor
and Euribor rates
Euribor is a benchmark rate that banks refer to when fixing
a price on interbank euro loans. There are 44 contributors to
the Euribor rate, far more than contribute to Libor. Most major
banks, including Santander, BNP Paribas and
UBS, are on the Euribor panel.
The European Commission raided banks, including Deutsche
Bank, last year in a probe of suspected Euribor