Britain’s banks say ready to give up Libor rate role

LONDON - Agence France-Presse

A man passes a Barclays branch in London. The Libor scandal erupted at Barclays. EPA photo

The British Bankers’ Association (BBA) said on Sept. 25 that it was willing to give up its role of setting the Libor interest rate in the wake of a rigging scandal that rocked Barclays. The announcement by the bank lobby group followed reports that a review of Libor by Martin Wheatley, managing director of U.K.’s financial regulator, will call for the BBA to lose the pivotal rate-setting role.

“The BBA seeks to work with the Wheatley review team as they complete their consultation on the future of Libor,” said a short statement on Sept. 25. “If Mr Wheatley’s recommendations include a change of responsibility for Libor, the BBA will support that,” it added.

 The Libor scandal erupted in June when Barclays bank was fined 290 million ($470 million, 363 million euros) by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.

This in turn led to the resignations of three leading Barclays executives -- chief executive Bob Diamond, chairman Marcus Agius and chief operating officer Jerry del Missier. The fallout risks becoming wider, however, with analysts claiming that the lender could face massive lawsuits, since mortgage rates passed onto customers were influenced by Libor rates.