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Apr 18

Libor – A serious bit of Fraud

LIBOR Manipulation – how doping has spiked the lending market and robbed small businesses – Ripped Off Britons
Cleaning Up Libor – The Economist
The Libor Probe – The Economist
As the above articles demonstrate, all is not well with Libor. Libor is the ‘London InterBank Offer Rate’. It’s set by the British Bankers Association BBA at 11 am each day. It looks as if the banks have been manipulating it. Really there should be no surprise about this – banks can’t be trusted. Of course the damage is being done to the small businesses that are locked in Interest Rate Swaps and other toxic instruments. We hear that there are worried bankers…..already working on defences. The head if the BBA has already ‘retired’ Though the BBA point out this is unconnected. It could be an interesting summer. Watch this space.
As predicted this story has broken. Barclays have a been fined £290m for systematic abuse of Libor. They didn’t act alone….whose next?

3 comments

  1. BritishBankers

    British Bankers’ Association here. We need to make two important factual corrections right away: the BBA does not set LIBOR. The LIBOR benchmarks are calculated daily from submissions made to Thomson Reuters: Thomson Reuters publishes the benchmarks daily, along with all of the submissions from individual banks which are used to calculate it.

    Secondly our chief executive is indeed stepping down this summer and has given her reasons, none of which involve LIBOR. She is not retiring.

  2. BusinessTom

    Thank you to the BBA for keeping us factually correct. Shame they haven’t acted to ensure their members don’t rip off customers……

    1. Eddy Weatherill

      IBAS has been working for 20 years to attempt to level the playing field for UK bank customer and over that 20 years we could not believe that UK banking could get much worse or the reputation of UK banking fall any further.

      We hoped that the FSA would live up to its own publications, particularly those on Principles and that those principles would mean proper policing of this industry. We also hoped that the Financial Ombudsman Service would also eventually ‘get behind’ what banks actually do and also how they work to protect themselves against legitimate customer complaints. However, many ‘false dawns’ have passed and banking excesses have not yet ‘peaked’. From that position we have to assume that the FSA, the BBA and the FOS have become part of the problem – not the solution.

      LIBOR has been another ‘own goal’ for the banking industry and alongside the SWAPS complaints which the FSA (and the FOS) has been attempting to ‘contain’ or minimize with BBA ‘assistance’ have been a long time in surfacing but in our opinion these will be further ‘own goals’ for the UK banking industry.

      Hopefully, the most recent illustration of excess and conspiracy will now mean that the BBA is removed from any future LIBOR control/s and also that Government makes certain the political ‘power’ that the BBA has enjoyed for far too long ends. Perhaps, then we may all start to see UK businesses recovering?

      Eddy Weatherill
      Chief Executive – IBAS
      Independent Banking Advisory Service

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