Euribor rigging probe switches to four global banks

Friday, 20 July 2012 09:42

Banking regulators are examining whether four specific banks tried to manipulate the European benchmark interest rate known as Euribor.

The Euribor rate is arrived at by 44 banks average submissions to set the interbank lending rate.

The regulators are investigating whether Barclays Bank and its traders were the ringleaders of a linked group of traders known to each other including some who worked for HSBC, Deutsche Bank, Societe Generale and Credit Agricole.

Former Barclays euro swaps trader Philippe Moryoussef is one of the traders being investigated. According to the Financial Times, Mr Moryoussef is being investigated as to whether he used a strategy based on fixing three-month swaps pegged to the Euribor rate.

In a statement released after it had reached a settlement with Barclays, the Commodity Futures Trading Commission, the US futures regulator, said some traders had tried to align trading strategies with traders from other banks to “profit from their futures trading positions.”

Regulators are investigating specific traders who used to work for the four banks, though investigations are at an earlier stage at Societe Generale where no specific traders have been named.

The Libor scandal, which has already claimed three senior executives at Barclays, has put pressure on regulators to overhaul the system or use a different method of valuing interbank lending rates.

Regulators initially said that up to 20 global banks were being investigated over the possible manipulation of the Libor interbank lending rate. However, these are the first specific details to emerge of what form that investigation may take.

The alleged involvement of traders at the four banks dates from before the period of 2007 – 2009 that the initial investigation appeared to focus on. Barclays £290 million settlement with US and UK regulators stated that there were two distinct periods of attempted rate-rigging, the first was for trading gain and the second, in 2007 – 2009 was to try and hide the true positions of the bank during the financial crisis.

Yesterday, it emerged that Sir Mervyn King has sent a letter to other central bankers to meet and discuss potential changes to the Libor process at a meeting in Switzerland in September.

To date, no allegation of any wrongdoing has been made against any current or former employees of the four named banks.


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