Lloyds Banking Group has been fined £105m by the FCA for trying to manipulate Libor and the amount it had to pay to the Bank of England to access the Special Liquidity Scheme.
The FCA says it is the joint third highest fine imposed by itself or the FSA. The fines relate to failings by Lloyds Bank and Bank of Scotland, both part of Lloyds Banking Group.
Overall Lloyds has been fined a total of £218m, including a £62m penalty to the US Commodity Futures Trading Commission and £51m to the US Department of Justice.
Lloyds has also paid the Bank of England £7.76m in compensation for the reduction in SLS fees received by the Bank as a result of Lloyds’ failings.
The regulator says £70m of the fine relates to attempts to manipulate the fees payable to the Bank of England for the firms’ participation in the SLS, set up to support struggling banks during the financial crisis.
The £35m which relates to Libor is the seventh fine handed out over rigging the interbank lending rate. The FCA says while the bank’s Libor-related misconduct is similar to that by other banks, manipulation of the repo rate has not been seen before.
FCA director of enforcement and financial crime Tracey McDermott says: “The firms were a significant beneficiary of financial assistance from the Bank of England through the SLS. Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable. This falls well short of the standards the FCA and the market is entitled to expect from regulated firms.”
Treasury select committee chair Andrew Tyrie, who also chaired the Parliamentary Commission on Banking Standards says individuals must be held responsible for this “appalling behaviour”.
He says: ”One of the central recommendations of the Commission was to ensure that individuals carry responsibility for their decisions and behaviour, and that they will be held accountable when they rig markets. This settlement is part of the much needed clean-up operation. Implementing the Commission’s proposals will be another.”
Lloyds Banking Group chief executive Antonio Horta-Osorio says: “The behaviours identified by these investigations are absolutely unacceptable. We take the findings of these investigations, which relate to issues from some years ago, extremely seriously.
“Together, the board and the group’s management team have taken vigorous action over the last three years to prevent this kind of behaviour, through closing or reducing our legacy investment banking activities.”
In a statement, the Bank of England says: “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.
“Not only were fees payable by Lloyds and Bank of Scotland reduced as a result of this conduct, so too were fees payable by other firms using the SLS. The compensation payment takes this fully into account.”