28 June 2012. Barclays is the third largest bank in the world. It has been systematically rigging the LIBOR (London Inter Bank Offered rate), a worldwide bench mark interest rate, to its favour siphoning off billions of dollars from clients’ accounts. This rigging dates back to 2005.
LIBOR is the lending rate at which top banks in London lend to each other. This bench mark rate is used in US and other countries to set interest rate on student loans, mortgages, credit cards and car loans. These loans are estimated at staggering $564 trillion.
US and UK regulators have reached a settlement of $ 450 million with Barclays. The traders inside Barclays wrongfully contacted the division of the bank that influences interest rates. The wrongful conduct is said to have happened on an almost daily basis at times. “We have another big fixing tom[orrow] and with the market move I was hoping we could set the 1M and 3M Libors as high as possible,” read an email from a trader to the Barclays department that reported the Libor rates.
Chancellor George Osborne told MPs the affair was “a shocking indictment of the culture of banks like Barclays in the run-up to the financial crisis”.
Pressure from shareholders and politicians mounted on chief executive Bob Diamond to step down. Diamond so far has issued only one statement apologising for the events that have led to the scandal.