FRANKFURT/LONDON Dec 12 Two more German banks
may quit or scale down their involvement in money market rate
Euribor, sources close to the lenders said, raising new
questions about its future and bucking the ECB's recent call for
more to join up.
Euribor and its larger counterpart Libor are Europe's key
gauges of how much banks pay to borrow from peers and underpin
swathes of financial products from Spanish mortgages to
derivatives contracts in London.
Like Libor, there is an official investigation into whether
banks manipulated Euribor rates for their advantage.
Two banks, including Citigroup, one of the world's
biggest, have already quit the benchmark in the wake of the
troubles and sources at two German public-sector "Landesbanks"
told Reuters their banks were considering following suit.
"If, in the future, we would have to reserve capital for
this, we will quit," a board member of one of the banks said.
"An evaluation is ongoing into whether we need to stay in the
Euribor panel," said a source at the second bank.
Another German bank, DekaBank, quit the Euribor panel two
weeks ago having been on it for just three months, a decision
also said to be over cost.
Over 40 banks still contribute to the benchmark, but the
Euribor-EBF group running it warned recently that more could
leave following the recent bad publicity.
The Libor scandal has already toppled the leadership of
Britain's Barclays and has left other banks bracing for fallout,
including the possibility of criminal charges against bankers
Cédric Quéméner director of Euribor-EBF said he wasn't aware
more banks planned to quit. "There's no sign of any potential
departures," he said, adding that improvements being made to
Euribor would hopefully convince banks to stay on board.
The European Central Bank, meanwhile, has encouraged more
banks to sign up to Euribor as part of a broader overhaul of
money market benchmarks.
The first results of the European Commission's review will
be published early next year and the ECB has called for
Euribor's organisers to use the prices of real money market
trades rather than banks' estimates of what they pay.
The future of Euribor and Libor was discussed further at a
meeting on Monday of the central bank's Money Market Contact
Group, a group of around 20 top money market traders from
Europe's big banks.
Much of the discussion centred on the various proposals that
have been put forward as part of the Commission's review
although two people who attended the meeting said the ECB also
repeated its concerns about banks quitting Euribor.
(Additional reporting by Andreas Kröner and Jonathan Gould in
Frankfurt; editing by Ron Askew)