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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 fined £290m for fixing 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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32 comments so far. Why not have your say?

Dominic Galvin

Jun 27, 2012 at 14:50

Maybe this is why Diamond took such a big bonus this year and faced down investors knowing that he would have to forgo his bonus next year.

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dumberfsa

Jun 27, 2012 at 15:05

Erm ... 'xcuse my possible ignorance ot the niceties of City back-scratching but doesn't this mean that the whole bunch of them are fraudsters pleading guilty today? Are they not guilty of Fraud by abuse of position - Fraud Act 2006 ? Has anyone booked them slots at the Old Bailey so their balls can be properly strung up for full inspection? Why are they even still employed?

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James Richards

Jun 27, 2012 at 16:58

Can anyone recommend a bank where I can get a current account without charges when in credit, where the admin. is 100% accurate, where the whole outfit is run totally ethically and counter service is speedy with very short waiting times at any time of day. All the ones that I have experienced or read about have shortcomings in some or all of these fields. Surely retail banking is nowhere near rocket science and has been carried on for donkeys years with little improvement since the days of quill pens, tall stools and ledgers so why is the rotten service etc that we get now so prevalent.

Customer last seems to be the order of the day.

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Brian Stafford Garthwaite

Jun 27, 2012 at 17:17

HANDELSBANKEN are in the top ten of the World's strongest banks, not used them myself,have heard good reports.

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Seymour

Jun 27, 2012 at 17:20

dumberfsa ..... at last someone who speaks the truth. Criminals accept that prison is an acceptable risk for what they do. Until CEO's have to stand up in court and possibly lose everything because of what they turned a blind eye to, or through lack of control, they will continue to give preference to their own pockets .

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Pensioner

Jun 27, 2012 at 17:30

Why was Bob Diamond and fellow directors not sacked for the mal administration of Barclays for their benefit (Big Bonuses). It was sharp practise once again at the expense of customers and share holders.

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Rick Sure

Jun 27, 2012 at 17:45

What great choose of banks we have, not sure which I prefer, Barclays a bank you can't trust or Natwest a bank you can trust to screw it up, at least Abbey National, B&B and A&L are now been screwed up by a Spanish Bank

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Errol Blackman

Jun 27, 2012 at 18:05

"Greed is good"............only for some however. Bonuses have been pocketed, the banks have been fined, and we the customers will pick up the tab in higher bank charges and government bail outs......when are the regulators and criminal justice system going to wake up to fact that fines are an ineffective deterent in these matters.

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Dr John

Jun 27, 2012 at 18:38

Evil, dishonest, venal, cheats, with no ethical or moral fibre. Why are these dishonest men not facing criminal charges? I would be struck off my professional register for a fraction of these misdemeanors.

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Andy via mobile

Jun 27, 2012 at 19:11

@Dr John;

Politicians+banks= revolving door.

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mo khan

Jun 27, 2012 at 19:48

Is this supposed to be a surprise. After all it is the banking industry.

We only get to hear, headline grabbing stuff . Lots of little grubby deals going on and dirt swept under the carpet. We won’t even get to know of as, misconduct masked by financial industry cronies

I wonder if this will be included in, patronizing and dumbing down,

boringly, repetitive, TV ads.!

Who can have confidence and trust them.!

Will any banker have any hand cuffs put on or go to jails as … criminals?

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Sage

Jun 27, 2012 at 20:22

Our Banks seem more like criminal operations, with two exceptions:-

The first exception is that the criminal bosses know what their underlings are up to but the CEO's of our Banks haven't a clue what trades their staff are conducting, and the amounts of money involved. They also do not have any understanding of the nature of the trades taking place and there does not seem to be a structure in place to find out. What is the evidence of their management skills? I would suggest there isn't any.

The second exception is that if the criminal boss is caught ,he faces the justice system, whereas the CEO's of our Banks continue to enjoy full employment on massive salaries, bonuses and pension packages, undoubtedly paying minimum income tax through off- shore loan trust schemes. Nice one.

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GrahamR

Jun 27, 2012 at 20:29

So if Barclays had NOT manipulated the information, would 3m LIBOR have been 0.005 percent higher or lower during the relevant periods ? For a corporate borrower who pays a DIFFERENT bank 275 basis points above 3m Libor on a variable loan basis, could we have a separate civil claim against Barclays ? Or have we been caused to be in a slightly better off position ?

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merchant_adventurer

Jun 27, 2012 at 20:46

So given the widespread nature of this and the apparent direction by management suggested by the DoJ,

just what are the cultures and values of Barclays that Bob Diamond refers to in his apology.

And as ever it leads back to traders (investment bankers) which was run by Diamond (during this time frame?) before stepping up to CEO.

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Whatisname

Jun 27, 2012 at 20:50

You can trust the banks to act in the self interest of their managers/traders to ensure they get their bonus. I agree with the others that say this is fraud and that until managers end up in court nothing will change. The shareholders should be insisting on the wholesale replacement of the board with the emphasis on directors who will put the shareholders first, assuming of course they can find any banker who would embrace such a radical concept. I think it shows the poor regulation we have of our financial institutions that this could be done for so long. It is interesting to note the American authorities are also involved, I wonder who started the investigation? Is £275M really a big fine for the likes of Barclays?

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john_r

Jun 27, 2012 at 21:26

Seems a bit rich that some of you want to string up Bob Diamond for the banks misdemeanours prior to 2010. He only became CEO in 2011.

I know its fashionable to blame bankers for all our problems but out there there are some credible attempts to turn things around.

As for my own bank well yes the interest has stopped on my current account though it continues to pay 1% on my basic savings account and 8%pa on

my regular saving account. I think this is a great deal overall considering they manage my money and provide ATM access to my cash wherever I go - all for free.

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Hotrod

Jun 27, 2012 at 21:40

It seems totally wrong to me that Barclays Plc has been fined. Why weren't the individuals concerned identified and prosecuted. Apparently concerns were first raised by dubious emails. If that was the case the SFO should have sent a few emails of their own laced with honey and then let the bees do their work.

The only affective deterrent is to make an example out of the worst offenders, and lock them up, but why are the authorities so damn soft?

Oh, wait a second, I forgot, our jails are already full, and we have no money to build more. So a little bit of racketeering has to be treated as an occupational hazard.

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mo khan

Jun 27, 2012 at 21:41

With no management skills?

Couple this with bullied employees, by unfair salary and pay distribution among banking.

This how high unjustified remuneration by rule of common sense standards,

and not groveling standard of the remuneration committees and FSA makes and becomes breeding ground for future dictators that go unpunished.

Employees are forced, submitted by threats of insecurity, become accustomed to being frightened of their own shadows and they too learn the art of groveling instead, for survival...never mind management skills!

Modern state of affairs of Banking and Finance Industry man is going viral...

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nickle

Jun 27, 2012 at 22:19

I agree with Graham, although its individuals. Lots of companies will be hedged, and so its a bit hard claiming there was a loss.

However, for someone with a LIBOR linked mortgage, its going to be different. I would suspect a test case would win, and that opens up the floodgates for all LIBOR linked mortgage holders to extract cash from them.

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MrPedanticke

Jun 27, 2012 at 23:09

I'm with Hotrod. Who picks up the bill when the company is fined? It's the customers and ordinary shareholders who had no say in the matter; and the cheats keep their pay, bonuses and jobs.

Of course it is a "limited liability company". Maybe this concession should be recognised for what it has become - a benefit for abuse by crooks and fraudsters. Now, all we need is some honest politicians to change the law!

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colin grant

Jun 27, 2012 at 23:29

This seems to be a great example of cheating bosses thinking they have done the right thing by foregoing their bonuses when they should in fact be in court on criminal charges. As has been said already, if you or I did this we would lose our jobs to start, probably followed by prosecution. They seem to lead charmed lives.

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Bhavesh Sutaria

Jun 28, 2012 at 00:19

Companies are run by people. They are responsible for decisions.

Staff clearly felt confident enough to do naughty stuff. Who promoted such culture ? Or was it unfortunate that a staff member just wanted to be cool & do such stuff to impress his bosses ? Are we really expected to believe the bullshit public headline of " it was the oiks who did it, honest sir " and " we the nobs never knew anything, honest guv " ?

Moreover, they just get fined & not get done for deception ?

Animal Farm ... some animals are more equal than others .. :)

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Paul Eden

Jun 28, 2012 at 09:41

Dumberfsa, Seymour and others have suggested criminal sanctions and wondered why these are not invoked against those proved guilty. I would suggest myself this must have something to do with the close relationship between politicians and business. I am sure politicians don't like to see personal friends or those who may offer remunertive positions to them when they have retired, go to prison and disappear.

I would think somebody must have been found complicit in these criminal activities. If Bob Diamond only came to his position in 2011, then quite reasonably he may not have had anything to do with this at all, not if it was all arranged in or before 2010.

I do think that where solid proof of malpractice is available those responsible for manipulating inter-bank borrowing rates and any other malpractices should not hold any positions anywhere in finance or any other industry. And they should pay the fines..not shareholders. This may mean emptying their pension pots or/and repaying past bonuses...with interest.

At present the only people paying are shareholders and customers...because it is always customers in the end who are sent the bill!

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charlie 12

Jun 28, 2012 at 10:55

Can the £59million fine be channelled into the construction of a prison for the exclusive purpose of housing errant bankers, and other City fraudsters? I'm sure a site overlooking Cape Wrath could be found.

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Bhavesh Sutaria

Jun 28, 2012 at 10:59

Paul, you hit the message right on the spot.

No politician takes action because of vested interests. One rule for them, and another for us mugs. The piper calls the tune, as always..

The amounts are massive. Its like trying to fix the gold or oil price.

Its not as if the bank was not making money, and the poor darlings were driven to desperate measures to earn a buck & a crust ...

I'd like to see US style Federal investigations, where they pay massive penalties, and the top nobs responsible banged up in real jail, to live in fear with murderers & rapists & suffer hard, not enjoy at our expense.

For every dollar made illegally, someone else ( the public usually ) has to pay. That is why insider trading, market price manipulations etc is illegal, because like insurance fraud, we eventually pay for their luxury.

Until we see extremely harsh penalties, to change attitudes on staying within limits, to honestly earn a ferrari lifestyle, nothing will change.

But don't hold your breath ....

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colin grant

Jun 28, 2012 at 13:15

Sorry Bhavesh but this scam went on for years and was a collaborative effort between several banks, from what we already know so far. It is absolutely impossible that this went on with all the bosses of each bank knowing nothing about it. They are insulting our intelligence to expect us to believe otherwise. Its the same as Murdoch knowing nothing about what went on in his organisation.

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mo khan

Jun 28, 2012 at 18:15

Banking Industry Management and Employee Dictate -

"Hear no evil, Speak no evil, See No evil".

Welcome to the Banking of University of:- GROVELERS!

Wonder what they are taught at these expensive, high fluting Eduction and Business Study Institution..., Come on do tell us, What you turn out?

Clearly they failed! laughing all the way to the Bank........

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dumberfsa

Jun 28, 2012 at 22:33

What's all this "poor Bob is the new boy" sentiment? Methinks he's a little old in the tooth for such a generous label, older than young Varley for a start!

Who's was it that secured the Abu Dhabi / Qatari preference deal? Who weedled the Lehman's fire sale deal in New York? Wasn't poor Bob's appointment as CEO more like a coup ? Who was it who earned more from the sale of iShares and the shiney bauble it ended up being wrapped in called BGI to BlackRock than might ever have surfaced as mere bonuses? Where might Protium have affected the price of eggs? Will the recent sale of Barclays share of BlackRock release yet more spondulis into poor Bob's cup which surely overfloweth big-time if he doth not deliberately spill a little bonus ?

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Bhavesh Sutaria

Jun 28, 2012 at 23:23

We all know what the reality is. Even though they say nothing.

At least in Japanese companies when this happens, someone resigns or commits hara kiri or shows some token remorse, even if false. I have not heard any token remorse, so shameless has the morality become.

In a huge organisation, certain department heads could carry on this nonesnse to massage profits etc, and the board not to be aware of it. The banking culture is not normal, and has to be seen to be believed.

It is certainly not the work of an ordinary clerk, though, and the silence is deafening amidst massive public anger and calls for action.

We don;t know whether criminal acts of market manipulation have been committed, but if what Colin says is correct & if indeed there has been collaborative action by banks, then globally police should raid their offices asap. in joint investigative action to discover the truth.

Unfortunately, all government's record in such action is shameful, so don;t hold out hope. They usually snuggle up cosily to any piper.

The politicians need lucrative directorships after they are redundant from government, and are reluctant to punish the director;s club. Maybe we the public deserve it, since politicians are poorly paid , and maybe we should pay them more. Or will they take extra pay & still carry on shamelessly ?

What will happen now ? Let me see now ... hmmm ....

1. Hoo Haa in parliament & press, lots of talk of "shock" and how " its unacceptable" and "justice being done ", but no real action.

2. A judicial inquiry setup - with the head being some cosy friend of the direcrtors & politicians club, ensuring nothing happens except a 10,000 brain numbing page report. Straight out of Yes, Minister ...

3. Years to come to a conclusion - we'll be bored by then.

4. Token slap on wrist fines & one scapegoat punished.

5. Harrumph pompously at the "justice" that has been done

6. Back to Carry on Endlessly shenanigans in the lucrative revolving door flow from politics to big business, the distasteful influence of money.

Please can someone tell me - How can I join this exclusive Club ? :)

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mo khan

Jul 03, 2012 at 14:33

For all apathetic, greedy, defeatists.

Bob Diamond quits Barclays after threat to embarrass regulators

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dumberfsa

Jul 03, 2012 at 14:49

And now we are all being embarassed by BOA and TeamGB.

We don't need cheats in financial services and we don't need cheats representing us at the Olympics.

They should go crawl back under a stone and stay there.

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Bhavesh Sutaria

Jul 03, 2012 at 15:30

Every human is greedy. Greed drives people to create wealth. This will involve corruption with big numbers, because the end game is money.

The problem with regulators & those in charge is that they have too many vested interests with the money makers. They can never properly protect the public. So anything they do for the oiks will be limited in nature, and is driven only by their corollary need to get votes to win elections.

Let's just accept realities & be happy. Accept the rule & abuse by masters, as the serfs did. Accept that men have biological urges for multiple female partners, as the French & polygamists do. Accept that illegal immigrants & scroungers are scamming us & need to be kicked up the arse.

Money rules ... as always

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