20 more banks were rigging interest rates: British bankers now facing criminal inquiry over scandal that was kept secret for years
- Barclays shares drop 15 per cent as pressure on Diamond grows
- George Osborne promises new criminal sanctions for market abusers
- RBS, HSBC and Lloyds all named as under investigation as scandal widens
By James Chapman, Becky Barrow, Ruth Sunderland and Rob Davies
Hundreds of bankers across three continents are embroiled in the interest-rate fixing scandal that has left Barclays chief executive Bob Diamond fighting to save his job.
As pressure intensified on Britain’s highest paid banking boss to quit, MPs heard a string of other financial institutions across the world were under investigation.
At least 20 banks are believed to be under suspicion, with growing demands for a criminal investigation.
Barclays Bank Tower at Churchill Place, Docklands: The bank has been fined £290million over attempts to rig money market interest rates. HSBC is one of the twenty other banks also under investigation, it emerged today
Barclays’ shares crashed by 15.5 per cent in a day as the implications sank in, wiping £3.7billion from its value, with other banks also hit.
Barclays has been fined £290million after devastating emails revealed that its traders manipulated the London Interbank Rate (Libor) – the rate at which banks lend money to each other.
Chancellor George Osborne told the Commons the exchanges ‘read like an epitaph to an age of irresponsibility’.
On the blackest day for Britain’s finance industry since the 2008 economic crisis:
- Serious Fraud Office investigators were revealed to be in talks with financial watchdogs over the scandal
- David Cameron and Ed Miliband piled pressure on Mr Diamond to resign
- Barclays and other banks were braced for a damning verdict today in an official report on mis-selling of complex loans to 28,000 small firms
- Mr Osborne promised new criminal sanctions for those guilty of market abuse
- Downing Street faced a growing clamour for a judge-led public inquiry into the ethics of Britain’s banks
SACKED RBS TRADER ACCUSES BANK CHIEFS OF COLLUDING WITH STAFF TO RIG INTEREST RATES
The alleged behaviour at RBS started when Fred Goodwin was chief executive
Royal Bank of Scotland managers are accused of colluding to rig the financial markets in court papers filed by a former employee.
Tan Chi Min, a former head of delta trading for RBS’s global banking and markets division in Singapore, alleges that managers condoned collusion between its staff to set the Libor rate artificially high or low to maximise profits.
He names five staff members he claims made requests for the Libor rate to be altered and three senior managers who he said knew what was going on. He also says the practice ‘was known to other members of [RBS]’s senior management’.
Mr Tan, who was eventually sacked for gross misconduct, worked for RBS from August 2006 to November 2011 and it is believed the alleged behaviour started when Fred Goodwin, pictured, was chief executive.
He claims that he was made a ‘scapegoat’ for malpractice condoned by managers and is suing for wrongful dismissal.
In the court papers filed in New York as part of a class action, Mr Lin also implicates hedge fund bosses who have given thousands of pounds to the Conservative Party.
It is claimed that hedge fund Brevan Howard asked RBS to fix financial data by making false submissions. The fund donated £10,000 to the Tories and spent £3,542 on flights for George Osborne to attend a conference in 2008.
RBS said it was confident of mounting a successful defence against Mr Tan’s claims.
Last night there were reports the bank is to be fined £150million for similar offences to those committed by Barclays.
Lloyds said it had suspended two traders. ICAP, the leading City broking firm headed by Tory donor Michael Spencer, has also been dragged into the scandal. It has suspended one employee and placed two on ‘administrative leave’.
A senior manager at U.S. giant Citigroup’s Japanese operation left the firm late last year after his division was temporarily banned from trading linked to Libor and its Tokyo equivalent, Tibor, by the authorities.
Giant Swiss bank UBS said it had approached regulators with information over abuses of the rate-setting system.
The Libor rate is crucial, since it is a key benchmark for trillions of pounds’ worth of financial products.
The £290million fine on Barclays from the UK and U.S. authorities, issued on Wednesday, is likely to be only the beginning of a wave of punishments and civil suits for damages against other banks caught up in the global web of deceit.
Royal Bank of Scotland and Lloyds are two other UK-based banks under scrutiny as part of the probe
Experts said banks might have to set aside billions of pounds in damages to cover their liabilities resulting from the conspiracy.
Former Liberal Democrat Treasury spokesman Lord Oakeshott said that once any criminal probe was underway, a public inquiry – like the one being conducted by Lord Leveson into media ethics – would have to be held.
‘Clearly, the worms that are now crawling out from under the stones at the banking industry are even worse than any of us thought,’ he added.