Lloyds fined £226m by UK and US regulators for Libor manipulation

Lloyds has become the latest bank to be fined for manipulating the London Interbank Offered Rate (Libor).

 

The benchmark interest rate determines the cost of a range of credit products which have a combined value of at least $350tn, but a number of banks have been charged with unlawfully tampering with it in order to create advantages for themselves. 

 

Lloyds has agreed to pay £226m in compensation after the UK's Financial Conduct Authority and a US trading commission accused it of “serious misconduct”. This consists of £218m in fines and £7.8m in compensation to the Bank of England. 

 

Shares in the group were flat at 74.83 pence in response to today's news. 

 

The allegations against it include collusion between traders to influence the actions of submitters, and the lowballing of rate submissions by banks to give a false impression of their financial health. 

 

It is the seventh financial institution to fall at the hands of the global investigation currently taking place into libor rigging by banks. So far, Barclays, Rabobank, ICAP, RBS, UBS and RP Martin have all settled payments with US and European authorities for their involvement. Deutsche Bank, HSBC, JPMorgan and Citigroup are among the banks still being investigated. 

 

“The Bank put the SLS in place to help banks get through the worst of the financial crisis. The fact that Lloyds and Bank of Scotland, the largest beneficiaries of this assistance, manipulated their three month GBP Repo Rate submissions in order to reduce fees is highly reprehensible and clearly unlawful,” the Bank of England said in a statement.