Page 6 - Barclays Bank (B)

LIBOR: 2012

In June, 2012, the FSA fined Barclays

£290m ($450m) for "serious and
widespread" misconduct for trying to

manipulate a key bank interest rate
which influenced the cost of loans and
mortgages – the London Interbank

Offered Rate (Libor). The fine was part of an international
investigation into the setting of interbank rates between 2005

and 2009.

Specifically, Barclays' misconduct related to the daily setting of
Libor and the Euro Interbank Offered Rate (Euribor). These were

two of the most important interest rates in the global financial

markets and directly influenced the value of trillions of dollars of
financial deals between banks and other institutions.

Barclays admitted that a group of traders lied about what it was

costing the bank to borrow and were working with other banks to
try to fix the interest rate. The FSA then started looking into other

banks which implied that Barclays was simply the first bank to

settle.

Libor Setting

The Libor is supposed to be the total assessment of the health of

the financial system. However, the Libor scandal arose when it

was discovered that banks were falsely inflating or deflating their
rates so as to profit from trades, or to give the impression that

they were more creditworthy than they were.