Belfast Telegraph

Friday 18 April 2014

Banks face more pain over Libor rigging

The rate-rigging scandal that has rocked the banking industry shows no signs of abating as US authorities summoned three British banks for questioning.

Royal Bank of Scotland, HSBC and Barclays were among seven banks handed legal notices demanding that they assist in an inquiry by the attorneys general of New York and Connecticut. The move raises fears over penalties and further damage to the already battered reputation of the UK's banks, with several other legal cases in multiple countries looking at the manipulation of Libor.

Ian Gordon, analyst at Investec, said there was "plenty more reputational damage and regulatory fines coming down the pipe" but added the issue was now largely "in the past" for Barclays.

Shares in the banks were broadly unaffected by the development, which comes after Barclays was fined £290m by UK and US regulators for manipulating the Libor, a key interbank lending rate.

Barclays declined to comment, while HSBC and RBS both referred to statements made with their half-year results acknowledging ongoing investigations.

Libor - the London interbank offered rate - is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.

Libor is a self-policing system that relies on information global banks submit themselves.