Banks seek to settle on Libor, sources say
No lone bank now wishes to go it alone after the backlash Barclays has faced
By CFOWorld staff | CFO UK | Published 09:56, 20 July 12
Regulators may consider a collective settlement with a group of banks under investigation for the key interest rate rigging scandal so that no single bank will have to face a major backlash alone like Barclays, Reuters reported.
The group of banks - so far no names have been confirmed - are said to be looking to pursue a group settlement so they can avoid the hostile treatment unleashed on Barclays by politicians and the public.
The discussions are preliminary, and it is unclear if regulators will enter these talks, aimed at resolving allegations that banks attempted to manipulate the London interbank offered rate, or Libor, a benchmark that underpins hundreds of trillions of dollars in contracts, Reuters reported.
Barclays was the first bank to settle with US and UK regulators, paying a £290 million fine for its role in Libor manipulation. The Barclays lost three senior executive, including chief executive Bob Diamond, in quick succession the following week, bowing to public pressure and erosion of the bank's reputation.
Sources told Reuters that none of the banks involved now want to be second in line for fear that they will face similarly harsh treatment.
More than a dozen banks are being investigated in the scandal, including Citigroup, HSBC, Deutsche Bank and JPMorgan Chase. They all declined to comment.
A group agreement would appeal to regulators because they would be able to announce a headline-grabbing figure, showing that they were dealing firmly with the banking industry's misdemeanours, a banker told Reuters on condition of anonymity.
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