The FSA has today fined Barclays Bank £59.5m for misconduct relating to the London Interbank Offered Rate and the Euro Interbank Offered Rate. This is the largest fine ever imposed by the FSA.
Barclays has also been fined £128m by the US Commodity Futures Trading Commission and £102.6m by the US Department of Justice, bringing the total fine levied against Barclays to £290.1m.
The regulator says Barclays’ breaches involved a significant number of employees and occurred over a number of years.
Barclays’ misconduct included making submissions which formed part of the Libor and Euribor setting process that took into account requests from Barclays’ interest rate derivatives traders. The FSA says Barclays’ traders were motivated by profit and sought to benefit the bank’s trading positions.
The bank also sought to influence the Euribor submissions of other banks contributing to the rate setting process, and reduced its Libor submissions during the financial crisis as a result of senior management’s concerns over negative media comment.
Barclays also failed to have adequate systems and controls in place relating to its Libor and Euribor submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.
Barclays also failed to deal with issues relating to its Libor submissions when these were escalated to Barclays’ investment banking compliance function in 2007 and 2008.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Making submissions to try to benefit trading positions is wholly unacceptable. This was possible because Barclays failed to ensure it had proper controls in place. Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.”
The British Bankers’ Association is carrying out a review of the way Libor is set and will publish its findings shortly.
Barclays chief executive Bob Diamond says he, finance director Chris Lucas, chief operating officer Jerry Del Missier and Rich Ricci, head of the lender’s investment banking unit, will forgo their annual bonuses this year in light of the fine.
He says: “Nothing is more important to me than having a strong culture at Barclays. I am sorry that some people acted in a manner not consistent with our culture and values. To reflect our collective responsibility as leaders, Chris Lucas, Jerry del Missier, Rich Ricci and I have voluntarily agreed with the Board to forgo any consideration for an annual bonus this year.”