British regulator probing seven banks over Libor scandal
LONDON — Britain’s financial regulator is investigating seven financial institutions in the Libor manipulation scandal that claimed the boss of British bank Barclays, a senior official told lawmakers Monday.
Tracey McDermott of the Financial Services Authority (FSA) also told a parliamentary committee it was unlikely there would be any criminal prosecutions of those implicated in the market manipulation.
The FSA is “investigating a number of institutions,” McDermott, its acting director of enforcement and financial crime, told lawmakers from parliament’s treasury committee.
Pressed for more details, she revealed that “seven institutions” were under the spotlight.
“It’s not only British banks,” she said, but she would not give more details as the investigation was “ongoing”.
McDermott admitted the FSA had “very limited capacity” to bring about criminal charges against the alleged manipulators.
“We have concluded that there was no realistic prospect to prosecute using our market offences of misconduct,” she said.
Barclays was fined £290 million ($452 million, 360 million euros) after admitting attempting to manipulate the Libor and Euribor rates between 2005 and 2009.
Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent.
The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.
During the same hearing, Andrew Bailey, FSA’s head of the Prudential Business Unit, accused outgoing Barclays chief executive Bob Diamond of having fostered a “culture of gaming” encouraged by “the tone at the top”.
FSA president Adair Turner also said the regulator had launched an internal investigation to identify why it had not acted on warnings received as early as 2007 that the Libor rate was being manipulated.