UK and US regulators have fined Barclays Bank £290 million for significant failings in relation to Libor and Euribor.
The Financial Services Authority (FSA) has fined Barclays Bank £59.5 million for misconduct relating to Libor and Euribor.
At the same time it emerged the US regulators had imposed a penalty of $200 million (£128 million) on the bank for attempted manipulation and false reporting charges. On top of this, as part of an agreement with the Department of Justice, Barclays admitted to its misconduct and has agreed to pay a penalty of $160 million.
Barclay chief executive Bob Diamond (pictured) said he will forgo his annual bonus this year following the massive fine.
Diamond said: ‘The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business. When we identified those issues, we took prompt action to fix them and co-operated extensively and proactively with the Authorities.
'Nothing is more important to me than having a strong culture at Barclays; I am sorry that some people acted in a manner not consistent with our culture and values. To reflect our collective responsibility as leaders, Chris Lucas, Jerry del Missier, Rich Ricci and I have voluntarily agreed with the board to forgo any consideration for an annual bonus this year.’
Record FSA fineThe FSA represents the largest the watchdog has ever imposed.
Barclays ‘significant failings’ which breached the FSA’s requirements include a range of issues and involve a number of employees, over a period of years.
The bank’s misconduct included making submissions which formed part of the Libor and Euribor setting process that took into account request from its interest rate derivatives traders.
These traders were motivated by profit and tried to benefit from Barclays’ trading positions.
The FSA said the bank also sought to influence the Euribor submissions of other banks contributing to the rate-setting process.
The bank also reduced its Libor submissions during the financial crisis due to senior management’s concerns over negative media comment.
Additionally, Barclays failed to have ‘adequate systems and controls’ relating to its Libor and Euribor submissions processes until June 2010 and did not review its systems regularly.
Tracey McDermott, acting director of enforcement and financial crime, said: ‘Barclays’ misconduct was serious, widespread and extended over a number of years.
‘The integrity of benchmark reference rates such as Libor and Euribor is of fundamental importance to both UK and international financial markets. Firms making submissions must not use those submissions as tools to promote their own interests.’
She added: ‘Making submissions to try to benefit trading positions is wholly unacceptable. This was possible because Barclays failed to ensure it had proper controls in place. Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.
‘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.’
The British Bankers Association is currently undertaking a review of the way Libor is set and will publish its findings shortly.