Bloomberg News

Singapore Watchdog’s Help Sought by Others in Libor Probe

March 09, 2012

The Monetary Authority of Singapore said regulators elsewhere asked it for help with probes into the possible manipulation of the London interbank offered rate. Photographer: Munshi/Ahmed/Bloomberg

The Monetary Authority of Singapore said regulators elsewhere asked it for help with probes into the possible manipulation of the London interbank offered rate. Photographer: Munshi/Ahmed/Bloomberg

The Monetary Authority of Singapore said regulators elsewhere sought its help with probes into the possible manipulation of global interest rates.

“MAS is aware of investigations into possible manipulation of interbank rates by other regulators and has received requests for assistance from some,” the Singapore central bank said yesterday in an e-mailed response to questions from Bloomberg News. It didn’t identify the regulators involved.

Regulators worldwide are investigating whether banks attempted to manipulate rates including the London interbank offered rate, the basis for $360 trillion of securities worldwide. The probes have called into question whether the banks can be trusted to set the rates with minimal regulatory oversight.

“MAS will also work with the relevant authorities to act on any suspected manipulation” by Singapore-based financial institutions or individuals, the regulator said. “MAS will assist where it is appropriate to do so.”

The U.S. is conducting a criminal investigation into suspected manipulation of benchmark rates including Libor, the Justice Department said in a letter to a federal judge that was made public on March 6. The Feb. 27 letter is the first public acknowledgment by the department of the criminal probe. European watchdogs are also scrutinizing potential collusion between firms involved in trading derivatives based on the rate.

Singapore Case

HSBC Holdings Plc (HSBA), Barclays Plc (BARC) and Royal Bank of Scotland Group Plc are among banks that have said they’ve received requests for information from regulators.

In Singapore, RBS has been accused of using an internal probe into Libor manipulation to find scapegoats after condoning such behavior. Tan Chi Min, a trader fired by the Edinburgh- based lender, made the allegations in court documents last month.

Tan said he and at least seven of his colleagues were regularly consulted on the bank’s yen Libor submissions by rate- setters and senior managers, according to the complaint filed with the Singapore High Court.

RBS said it fired Tan because he tried to improperly influence the bank’s rate setters from 2007 to 2011 to persuade them to offer Libor submissions that would benefit his trading positions, according to the bank’s court papers in January.

Japan’s Interbank Rate

The Japanese Bankers Association said Feb. 16 it may take measures to improve the way it compiles the nation’s key interbank lending rate, known as the Tibor.

Citigroup Inc. (C) and UBS AG (UBSN) were ordered by Japan’s Financial Services Agency in December to suspend some derivative transactions after the regulator found that staff at the firms attempted to influence interbank lending rates.

John Lim, an external spokesman at the Association of Banks in Singapore, declined to comment today.

The association, which compiles the Singapore interbank rate, had said there was “little chance” of banks colluding to manipulate the rate, the Business Times reported on Feb. 17, citing the group’s director Ong-Ang Ai Boon. The association has no plans to change the way it computes Sibor, according to the newspaper report.

Libor is generated through a daily survey of firms conducted on behalf of the British Bankers’ Association in which banks are asked how much it would cost them to borrow from one another for 15 different time periods, from overnight to one year. A predetermined number of quotes are excluded and those left are averaged and published for individual currencies before noon.

Questions about the accuracy of the benchmark were first raised by the Bank for International Settlements, the central bank for central banks, in a March 2008 report that indicated lenders were “wary of revealing” information that could signal they were struggling to borrow funds.

To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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