Thursday, August 16, 2012

Banks summoned by US regulators

The United States regulators have summoned seven banks, including HSBC (NYSE:HBC), Barclays (LON:BARC) and Royal Bank of Scotland   (NYSE:RBS), as investigations continue into the libor manipulation scandal.

About a month ago, Barclays was fined approximately $454 million by UK and US authorities. At that time, it was also revealed that other banks might also be involved in interbank rate manipulation. The investigations were further widened and now seven banks have received subpoenas from Attorney General of New York and Connecticut.


The following banks have been called:
1.     HSBC
2.     Royal Bank of Scotland
3.     Barclays
4.     Citigroup
5.     JPMorgan
6.     UBS
7.     Deutsche Bank

The investigators have assumed that at least one other bank, out of the seven, must have worked with Barclays to successfully manipulate libor. UBS had also announced in its Q2 results that it was currently being investigated by government authorities.

RBS CEO Stephen Hester had said earlier this month that his bank has already taken strict action against those found involved in the scandal, which included dismissal of some of the staff. He believes that "the regulators must decide how they want to deal with the situation. We will stand up and take any punishment that comes our way,"

According to an analyst at SRN, “This is the first time we're seeing a legal case that is trying to prove [collusion]. If they can prove it, then all the fees could amount to tens of millions of pounds,"

In other words, if criminal charges are successfully applied then the banks might even have to pay those investors who suffered losses due to rate rigging.

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