As a result of a cross-border investigation into the manipulation of the setting of the LIBOR (London Interbank Offered Rate) and EURIBOR (Euro interbank offered rate) interest rates, Barclays Bank has been fined £59.5 million by the UK Financial Services Authority, US$200million by the U.S. Commodity Futures Trading Commission and in addition, as part of an agreement with the US Department of Justice, Barclays admitted to its misconduct and agreed to pay a penalty of US$160 million.
As the LIBOR and the EURIBOR are benchmark reference rates that indicate the interest rate that banks charge when lending to each other and are used in the operation of both UK and international financial markets the findings of misconduct have had major implications.
The Bank’s CEO has resigned (see BBC News).
From a compliance point of view, the FSA investigation concluded that:
• Barclay’s submissions which formed part of the LIBOR and EURIBOR setting process took into account requests from Barclays’ interest rate derivatives traders. These traders were motivated by profit and sought to benefit Barclays’ trading positions;
• Barclay’s sought to influence the EURIBOR submissions of other banks contributing to the rate setting process; and
• Barclay’s failed to have adequate systems and controls in place relating to its LIBOR and EURIBOR submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.
