Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Regulators hit Barclays with £290m fine for Libor failings

Regulators hit Barclays with £290m fine for Libor failings

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 fine

The 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.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Play Kames' A-rated Goddin: how investing in games has changed forever

Kames' A-rated Goddin: how investing in games has changed forever

Neil Goddin sees investing in computer games as having changed forever as the companies become much less cyclical.

Read More
Your Business: Cover Star Club

Profile: why GWM believes in life after Lloyds

Profile: why GWM believes in life after Lloyds

Lloyds Private Banking duo Chris Payne and Tom Milson left the company two years ago after deciding to act on their belief that ‘we could do it better’

Wealth Manager on Twitter