Libor scandal: FSA and US criminal probe could see banks pay out billions in damages

June 28th, 2012

FAKE NEWS for the Zionist agenda

Analysts say penalties could dwarf the record £290m fine for Barclays
HSBC, RBS and Lloyds all saw shares plummet in value in a sign investors fear the crisis could have greater ramifications

By
Rob Preece

PUBLISHED:

10:14 EST, 28 June 2012

|

UPDATED:

11:20 EST, 28 June 2012

Fears that more banks will be hammered with colossal fines totalling billions of pounds grew today after George Osborne revealed that Barclays was ‘not alone’ in its efforts to rig interest rates.

The fallout from the record £290million penalty given to Barclays was being felt across the City as confidence in the banking sector sank once again.

Analysts warned that the cost of lawsuits could dwarf the fine handed to Barclays.

Shares in rival banking groups HSBC, RBS
and Lloyds plummeted in value today in a sign that investors fear the
crisis will bring greater ramifications.

Money worries: RBS Group and other banks saw shares slump today as fears grew that they could be hit with huge fines

Money worries: RBS Group and other banks saw shares slump as fears grew they could be hit with huge fines

Dramatic: Shares in RBS Group were hit hard as details of the Barclays penalty rattled the banking sector

The fine was imposed on Barclays by the Financial Services Authority (FSA) and US regulators over attempts to rig the Libor (London Interbank Offered Rate) and Euribor interbank lending rates.

Industry experts believe the record penalty might have been even higher had Barclays not co-operated with investigators.

It is thought that Barclays provided useful information, with the US Department of Justice referring to its ‘extraordinary co-operation’, which helped save it from a criminal prosecution.

The FSA is investigating activities at Lloyds, HSBC and Royal Bank of Scotland.

Under pressure: Lloyds Banking Group, led by chief executive Antonio Horta-Osario (pictured) is under investigation

Under pressure: RBS Group, led by chief executive Stephen Hester (pictured), is under investigation

Under pressure: Lloyds Banking Group and RBS Group, led by chief executives Antonio Horta-Osario (left) and Stephen Hester (right) respectively, are both under investigation

The US Department of Justice has said
that criminal investigations into ‘other financial institutions and
individuals’ are ongoing.

Financial institutions also believed
to be under the regulators’ microscope include UBS of Switzerland, JP
Morgan, Deutsche Bank, and Citigroup of the US.

Sandy
Chen, banking analyst at Cenkos Securities, said he was braced for
billions of pounds in fines and damages across the sector.

He
said: ‘The cost of lawsuits related to the Libor rate scandal will
likely dwarf the £290 million fine imposed on Barclays – and since Royal
Bank of Scotland, HSBC and Lloyds Banking Group have also been named in
lawsuits, we expect they will also face significant fines and damages.

‘We are pencilling in multi-year provisions that could run into the billions.’

Mr Chen said recent disclosures on interest rate derivatives gave an indication of each bank’s potential exposure to the rate scandal.

RBS reported £422billion, HSBC reported £328billion and Lloyds recorded £43 billion, according to Mr Chen.

Scrutiny: Lloyds Banking Group's London headquarters. Analysts say huge fines could be imposed across the sector

Scrutiny: Lloyds Banking Group’s London headquarters. Analysts say fines could be imposed across the sector

Devalued: Shares in Lloyds Banking Group slumped this morning but rallied slightly during the afternoon

Analysts at Killik Co agreed the interbank probe was likely to pull in other UK banks, but said Barclays should be able to withstand multibillion-pound damages.

They said: ‘Some estimates are that potential damages could run into the several billions of dollars, certainly damaging to Barclays but not too significant in the context of core tier one capital of £43 billion and annual net income over £3 billion.’

Crisis: George Osborne told MPs that Barclays was 'not alone' in its efforts to rig interest rates

Crisis: George Osborne told MPs that Barclays was ‘not alone’ in its efforts to rig interest rates

The interbank lending investigation is the latest blow to the reputation – and shares – of Britain’s banks, coming just days after RBS suffered an embarrassing computer crisis.

Last week most of the major players also suffered a ratings downgrade by agency Moody’s and the sector is also reportedly facing a formal investigation over the sale of complex interest rate swaps to small and medium-sized businesses.

A banking insider told MailOnline: ‘There are various different investigations being carried out by multiple regulators. It is a sprawling thing.’

City trading rules prevent financial institutions from commenting on their movements in their share prices.

A Lloyds Banking Group spokesman said: ‘As with many others in the sector, the Group is assisting various regulators in their ongoing investigations into the setting of the Libor.

‘Until these investigations are completed, it would be inappropriate for us to comment any further.’

A spokesman for RBS group, which owns NatWest and the Royal Bank of Scotland, said: ‘RBS Group continues to cooperate with the investigations and liaise with the relevant regulators.’

An HSBC spokesman said the bank announced in its annual results earlier this year that investigations were being conducted into its activities.

‘We have been contacted and we are co-operating,’ he added.

Uncertainty: The scandal comes only days after RBS Group, which owns NatWest, suffered an embarrassing computer crisis

Here’s what other readers have said. Why not add your thoughts,
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What an opportunity to get the Nations Fiscal Package back on track and in the Black. Fine them the national debt. £360 Trillion the banks are worth…

– Enforcer, P’TON, 28/6/2012 17:39

If the Banks have charged us too much in any way shape or form, it isn’t enough to prosecute them and leave it at that. We should be compensated for our loss too.

– Aj, UK, 28/6/2012 17:36

Since this started in 2005, two of the British banks on the Sterling panel, Abbey National and HBOS, have ceased to exist. Of the four remaining British banks, none of Horta-Osario, Hester, Diamond and Gulliver (HSBC) were in charge of their banks at the time. So who are we going to blame?

– John S, Bromley, 28/6/2012 17:32

I hope they also investigate any private bets made by those involved.

– David Thomas, North Wales, 28/6/2012 17:27

When will they learn their lesson?. They still think they are untouchable, maybe after they have been brought to their knees by all the lawsuits etc, they might change their attitude?.

– Alan, Huddersfield, 28/6/2012 17:24

When they are done with this investigation will they finally start on OPEC. They have been colluding and fixing oil prices for decades.

– Flavour of the Month, London, 28/6/2012 16:49

And in whose pocket do these vast penalties go?

– Confused of Bromley, Still Confused, 28/6/2012 16:48

I suppose the US criminal probe forced the F S A from its supine position to action?

– Turn away, UK, 28/6/2012 16:48

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