US regulator sues 16 banks for alleged Libor rigging

London financial district skyline Some of the world's biggest banks have been accused of colluding to fix Libor

A US regulator has sued 16 banks for allegedly manipulating the London interbank offered rate (Libor).

The Libor rate is used to set trillions of dollars of financial contracts, including mortgages and financial transactions around the world.

The regulator said the manipulation caused substantial losses to 38 US banks which were shut down during and after the 2008 financial crisis.

The sued banks include Barclays, HSBC, Citigroup and Royal Bank of Scotland.

The British Bankers' Association (BBA) has also been sued by the regulator - the US Federal Deposit Insurance Corporation (FDIC).

"BBA participated in the alleged scheme to protect the revenue stream it generated from selling Libor licenses and to appease the Panel Bank Defendants that were members of the BBA," it was quoted as saying by the AFP news agency.

The FDIC alleged that the banks mentioned in its lawsuit rigged the rate from August 2007 to at least mid-2011.

Other banks named in the lawsuit include Bank of America, JPMorgan Chase, Deutsche Bank, Lloyds Bank, Credit Suisse, UBS, and Rabobank.

Growing pressure
Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating
The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule.

Libor is the average rate at which banks lend money to one another and is decided on a daily basis.

Most of the world's biggest banks contribute estimates to form the Libor.

But there have been allegations that some have looked to profit from it by understating or overstating their submissions.

Over the past two years, regulators across the globe have been investigating the manipulation of the rate and there have been $3.7bn (£2.26bn) in fines to date.

A string of international banks and brokers, including Barclays and the Royal Bank of Scotland, have faced both criminal and civil penalties for their involvement in the scandal.

Some banks have also been found to have understated their submissions in the period during and after the financial crisis.

They did so in order to avoid the perception that they were having to borrow at higher interest rates than their peers and might therefore be in financial difficulty.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Business Live

  1.  
    Via Twitter Rory Cellan-Jones Technology correspondent
    apple

    tweets: Amazing Apple quarter: record $18bn profit, 74m iPhones - most profitable product in history? But iPads disappoint

     
  2.  
    06:57: Greek euro exit? BBC Radio 4

    Lord Desai says most of the debt Greece owes is to public bodies such as the European Union and IMF. Greece cannot continue to pay off its debts for the next 20 years, he adds, and Greece and Germany have to decide whether they can afford for Greece to leave the eurozone. Anne Richardson of Aberdeen Asset Management points out £8bn of bank deposits have left Greek banks since November because investors see a so-called Grexit as having come "one step closer".

     
  3.  
    Via Twitter Stephanie McGovern Breakfast business reporter
    port

    tweets: Morning from the Port of Tyne - where today I'm talking about exports. #economy

     
  4.  
    06:44: Greek euro exit? BBC Radio 4
    Greece"s Prime Minister Alexis Tsipras is accompanied by associates

    Now that the Greek election has been won by Syriza, thoughts have begun to turn to negotiations over the country's debts. Greece could request to pay no interest on those debts for about five years, Lord Desai, economist and chairman of the Official Monetary and Financial Institutions Forum, tells Today. "That would save them about 4% of GDP," he says. But, he adds, there "really is no human way that Greece can pay the debt without ruining at least one generation's future."

     
  5.  
    06:31: GDP growth Radio 5 live

    Anne Richards, chief investment officer of Aberdeen Asset Management is the markets guest on Wake Up to Money. "You have to be a wee bit careful with quarterly numbers as they are subject to a lot of revision," she says. "The overall picture for the year was reasonably positive." Low construction growth was "a bit worrying." Strong sterling is a drag on GDP growth. Reliance on services rather than making things is also a challenge, she says. More engineers are needed.

     
  6.  
    06:20: Apple profit Radio 5 live
    The Apple logo

    The biggest quarterly profit ever for a company: $18bn, has been posted by phone pedlars Apple. Daniel Eran Dilger who writes for AppleInsider tells Wake Up to Money. Apple makes a load of margin from its high-end phones. They also make a lot when you break your power cable and have to splurge £65 on a new one, as presenter Adam Parsons learned earlier this week.

     
  7.  
    06:12: Services growth Radio 5 live

    More from Greg Madigan, the boss Subway UK and Ireland on Wake Up to Money. Hospitals, service stations and forecourts, or "non-traditional locations" are a big area of growth for the firm, he says. He used to be an air traffic controller, he adds.

     
  8.  
    06:01: Services growth Radio 5 live

    Services is what's propping up GDP growth, we learned yesterday. Greg Madigan, the boss Subway UK and Ireland is on Wake Up to Money. "The price of oil has come down putting more money in peoples pocket... one of the things that benefit from more discretionary spending is food retail," he says. They have 2,000 stores in the UK and Ireland now.

     
  9.  
    06:00: Howard Mustoe Business reporter

    Good morning. Keep your thoughts on today's news rolling in via email bizlivepage@bbc.co.uk and on twitter @BBCBusiness

     
  10.  
    06:00: Matthew West Business Reporter

    Morning everyone. In case you missed it EDF became the last of the "Big Six" energy suppliers to cut its gas prices last night. And US tech giant Apple reported the largest quarterly profit in corporate history. Today sees trading updates come from Brewin Dolphin, Johnson Matthey, Sage and Anglo American. We'll bring you those numbers and more as we get them.

     

Features

From BBC Capital

Programmes

  • A computer generated model of a lift shaftClick Watch

    The future of elevator technology - lifts that can climb up to 1km in the air and even travel sideways

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.