Business World

Saturday 21 October 2017

Bank implicated in Libor rigging

City workers walk past the Bank of England in London. Photo: Toby Melville/Reuters
City workers walk past the Bank of England in London. Photo: Toby Melville/Reuters

Marcus Wright

THE Bank of England repeatedly pressured commercial banks to lower their settings for the benchmark London Interbank Offered Rate during the 2008 financial crisis, according to the BBC.

The report cited a secret recording in which a senior manager at a large UK bank instructed a Libor submitter to lower his rates.

"The bottom line is you're going to absolutely hate this ... but we've had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower," the BBC cited the manager as saying on the recording.

Libor is the rate at which banks lend to each other, and is used to set millions of pounds worth of financial deals including car loans and mortgages. It is also used in complex overseas financial transactions.

A BOE spokesman said Libor and other global benchmarks "were not regulated in the UK or elsewhere during the period in question" and that the central bank has been assisting the Serious Fraud Office's investigations into Libor manipulation, by providing, on a voluntary basis, documents and records.

John McDonnell, shadow chancellor for the UK Labour Party, called for an immediate investigation, saying the report "contradicts past assurances about the role of the Bank of England in the Libor scandal," raising questions over trust in financial institutions.

Banks have paid more than $9bn (€8.5bn) in fines to settle accusations they rigged the benchmark Libor rate, used to value trillions of dollars worth of financial products.

(Bloomberg)

Irish Independent

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