U.K. Chancellor of the Exchequer George Osborne will make a statement in Parliament today after Barclays Plc (BARC) was fined $451 million for attempting to manipulate the inter-bank lending rate, or LIBOR, the Treasury said.
Osborne will tell the House of Commons shortly after noon that the government has been considering an overhaul of how Libor is set and will spell out steps to prevent abuse, an aide said. Barclays received the largest penalties ever imposed by regulators in the U.S. and U.K. after admitting it submitted false London and euro interbank offered rates.
Osborne will also say that he plans to change the law if it is not possible to bring criminal charges against such acts, said the aide, who declined to be identified because the plans aren’t yet public. The chancellor will also say that Chief Executive Officer Robert Diamond and his team will have to answer questions over their behavior, the aide added.
Diamond and three lieutenants will forgo their bonuses as a result, Britain’s second-biggest bank by assets said in a statement yesterday. “A member of senior management” instructed Barclays’ Libor staff to lower their submissions to make them match other banks and dispel concern about the lender’s health, the U.S. Commodity Futures Trading Commission said.
Derivatives traders requested the false submissions in the Libor and Euribor setting process, as they were “motivated by profit and sought to benefit Barclays’ trading positions,” the U.K. Financial Services Authority said. The settlements with the FSA, the CFTC and the U.S. Department of Justice are the first in an international investigation into whether banks tried to manipulate Libor, the benchmark rate for $360 trillion of securities, to hide their true cost of borrowing.
Citigroup Inc. (C:US), Royal Bank of Scotland Group Plc, UBS AG (UBSN), ICAP Plc (IAP), Lloyds Banking Group Plc (LLOY) and Deutsche Bank AG are among firms that are being probed by regulators worldwide into how Libor is set.
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