Regulators probe possible rigging of Libor rates
By Steve Slater |
March 18, 2011, Friday
|
Print Edition
Print Edition
REGULATORS probing alleged manipulation of Libor rates, the benchmark for interbank borrowing costs, have been focusing on five lenders, a person familiar with the matter said yesterday.
Bank of America, Citigroup, Barclays, WestLB and UBS are being investigated by regulators in the United States, Britain and Japan, the source said, who asked not to be named.
Swiss bank UBS on Tuesday said it had received subpoenas from US and Japanese regulators regarding whether it made "improper attempts" to manipulate the London Interbank Offered Rate.
Yesterday's Financial Times, citing people familiar with the investigation, reported BofA, Citi and Barclays had all received subpoenas from US regulators. Investigators had also demanded information from Germany's WestLB, although the bank said it had not been subpoenaed, the paper said.
Regulators declined to comment.
Barclays, WestLB and Bank of America would not comment and Citi could not be reached.
Regulators are investigating the setting of dollar Libor prices in 2007 and 2008, just before and during the financial crisis.
The British Bankers' Association sets Libor prices each day, providing a benchmark that reflects the interest rates being used by the world's major lenders.
The BBA said Libor has a straightforward and transparent calculation method which excludes any rates that are significant outliers.
Libor is calculated by banks contributing the rate at which they expect term funding to be offered between prime banks at 11am GMT. Sixteen banks contributed to the dollar rate in 2008, and the lowest and highest four contributions are discarded and the remaining rates averaged.
Bank of America, Citigroup, Barclays, WestLB and UBS are being investigated by regulators in the United States, Britain and Japan, the source said, who asked not to be named.
Swiss bank UBS on Tuesday said it had received subpoenas from US and Japanese regulators regarding whether it made "improper attempts" to manipulate the London Interbank Offered Rate.
Yesterday's Financial Times, citing people familiar with the investigation, reported BofA, Citi and Barclays had all received subpoenas from US regulators. Investigators had also demanded information from Germany's WestLB, although the bank said it had not been subpoenaed, the paper said.
Regulators declined to comment.
Barclays, WestLB and Bank of America would not comment and Citi could not be reached.
Regulators are investigating the setting of dollar Libor prices in 2007 and 2008, just before and during the financial crisis.
The British Bankers' Association sets Libor prices each day, providing a benchmark that reflects the interest rates being used by the world's major lenders.
The BBA said Libor has a straightforward and transparent calculation method which excludes any rates that are significant outliers.
Libor is calculated by banks contributing the rate at which they expect term funding to be offered between prime banks at 11am GMT. Sixteen banks contributed to the dollar rate in 2008, and the lowest and highest four contributions are discarded and the remaining rates averaged.
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