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Rate probe turns to four major banks

Jul 19 2012 16:38
Financial Times

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Last traded 179
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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA


Last traded 259
Change -8
% Change -3
Cumulative volume 662609
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Rates scandal may cost banks $22bn

Cape Town - According to an article on Financial Times regulators are focusing on four of Europe’s biggest banks, probing the attempted manipulation of Europe’s benchmark interest rate, suspecting that Barclays’ traders were the ringleaders of a circle that included other major European banks.

HSBC, who ended talks to buy an $8bn majority stake in Nedbank Group [JSE:NED] in 2010, stands accused of interest rate manipulation with Crédit Agricole, Deutsche Bank and Société Générale, which also have footholds in South Africa.

People involved in the process have told the Financial Times that evidence that links traders at all four banks and Barclays' former euroswap trader Philippe Moryoussef is under scrutiny.

This comes after the clear-out of senior management at Absa Group [JSE:ASA] parent company, Barclays. The bank paid a £290m fine to settle probes in the US and UK with regars to its involvement in the attempted manipulation of the London interbank offered rate (Libor), and its European equivalent, Euribor.

The article states that the furore over the attempts to rig lending benchmarks has led to calls from policy makers around the world for an overhaul of the system that underpins $500 trillion of contracts globally.

"An unnamed trader orchestrated an effort to align trading strategies among traders at multiple banks, in order to profit from their futures trading positions," the the Commodity Futures Trading Commission, the US futures regulator, said in its settlement with Barclays.

Moryoussef is alleged to have contacted a number of traders whom he knew at other banks, either through previous employment or via professional or personal networks, according to the Financial Times.

The article also states that there had been an assumption that most banks under investigation were suspected of manipulating Libor submissions in the global financial crisis period betwee 2007 and 2009, to appear healthier than they really were, sometimes allegedly with the implicit nod from policy makers.

Barclays’ settlement with regulators made it clear that there were two distinct periods of attempted manipulation – the first for trading gain and the second for broader reasons of financial stability.

Sir Mervyn King, governor of the Bank of England, has sent a letter to other top central bankers inviting them to a meeting in Switzerland to discuss “radical reforms” to the Libor process on September 9. The invitees include the head of the European Central Bank, the Federal Reserve and other major central banks, according to a person familiar with the contents.

Regulators’ probes continue. But to date there has been no allegation of wrongdoing made by any authorities against any of the individuals or any bank beyond Barclays.

nedbank  |  absa  |  barclays  |  deutsche bank  |  hsbc  |  collusion



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