Libor Scandal Set To Dog Global Banks For Months To Come
06/29/2012| 07:13am US/Eastern
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--RBS denies report that it is set to settle at GBP150 million
--Other banks say outcome of probes are a long way off
--BOE King condemns "deceitful manipulation" of Libor
By Marietta Cauchi
LONDON--Banks involved in ongoing probes into interest rate manipulation are months away from reaching any settlement with authorities and it is unclear why Barclays PLC (BCS) has settled ahead of its peers, people familiar with the situation said Friday.
Barclays is one of several global banks investigated by the U.K.'s Financial Services Authority, the U.S. Commodity Futures Trading Commission and the U.S. Justice Department's fraud section who are trying to determine whether some banks deliberately tried to skew the London inter-bank offered rate benchmark, or Libor, by deliberately submitting inaccurate data during the financial crisis.
Barclays Wednesday admitted that its traders attempted to manipulate Libor and agreed to pay record fines totaling GBP290 million ($454 million).
Other banks, including Citigroup Inc. (>> Citigroup Inc.), Deutsche Bank AG (DB), HSBC Holdings PLC (HBC), J.P. Morgan Chase & Co. (JPM) and Royal Bank of Scotland Group PLC (RBS), are still being investigated and don't expect to reach a settlement any time soon, people say.
RBS said Friday it is cooperating fully with the authorities but that any outcome was months away. The bank was responding to an article in The Times that said it was set to pay about GBP150 million.
"The process is not as far advanced as the article suggests and there can be no certainty as to the timing or amount of any fine or settlement at this point. RBS will continue to cooperate with the authorities," the bank said.
People familiar with the thinking at other banks say that settlement talks, if any, are at a very early stage and "nowhere near close," one person said. "Not imminent," said another.
It remains unclear why Barclays settled at what seems to be a very early stage in the proceedings.
The FSA declined to comment on the progress of its probes into the other banks but the authority typically takes the degree of cooperation by an alleged wrong-doer into account in all its investigations. The FSA said "Barclays cooperated fully" and agreed to settle at an early stage.
Analysts suggest that Barclays' relatively swift settlement doesn't mean it was the most at risk from litigation and that, in fact, the contrary could be true.
"Reading the statements by the authorities, we expect to get settlements by others in the course of time which could be more punitive," Credit Suisse said Friday.
Meanwhile, Bank of England Governor Mervyn King condemned the "deceitful manipulation" of Libor and said the benchmark should be calculated with reference to actual transactions between banks and not by individual banks' quotes as it is now.
"The idea that my word is my Libor is dead," Mr. King said.
The Libor investigation is separate to another that appeared to be settled Friday. RBS, Lloyds Banking Group (LYG) HSBC and Barclays have all agreed to settle charges for misselling interest-rate hedges. No fines were imposed but the banks agreed to provide compensation to affected clients.
-Write to Marietta Cauchi at marietta.cauchi@dowjones.com
(Jason Douglas and Paul Hannon contributed to this article.)
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