View the article online at http://citywire.co.uk/money/article/a599973
Barclays fined £290m for fixing bank lending rates
Bob Diamond and other executives forgo their annual bonus after Barclays' misconduct relating to inter-bank lending rates.
Barclays has been handed the City regulator’s biggest-ever fine of £59.5 million for its part in fixing inter-bank lending rates, prompting chief executive Bob Diamond and other executives to give up their annual bonuses.
In total, the bank has been fined £290 million by US and UK regulators over misconduct that the FSA said 'involved a significant number of employees and occurred over a number of years'.
The London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) rates determine the interest rate level which banks charge when lending money to each other.
In order to set an average rate commercial banks have to provide information about their lending rates to other banks. Barclays was found to have manipulated its rates at the request of its interest rate derivative traders who would profit from Barclays’ trading positions.
It was also found to have given submissions of lower lending rates to the Libor setting committee because it would make the bank’s financial position look stronger.
Gavin Lumsden appeared on BBC TV to discuss the fines – click on the image below to watch the video
The Financial Services Authority (FSA) said Barclays failed to have adequate systems and controls in place relating to its Libor and Euribor submissions until June 2010.
The FSA worked with the US Commodity Futures Trading Commission (CFTC), the US Department of Justice (DoJ), the Federal Bureau of Investigation and the Securities and Exchange Commission as part of a cross-border investigation into Barclays.
The move comes as regulators in the US, Japan and UK investigate whether some of the biggest banks have conspired to manipulate the benchmark rate.
According to news reports in October, RBS and Deutsche Bank were among banks to have had their offices raided by European Commission officials as part of an investigation into the suppression of Euribor rate.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, warned other banks today: 'The FSA continues to pursue a number of other significant cross-border investigations in this area and the action we have taken against Barclays should leave firms in no doubt about the serious consequences of this type of failure.'
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