Lloyds to pay £217 million over Libor rigging

‘Every little helps...’  Culture of fiddling costs Lloyds £217m in fines

Associate Business Editor

Lloyds Banking Group was hit with £217m in fines today after its traders manipulated interest rates to rip off the Bank of England on a taxpayer-backed scheme intended to keep their employer afloat.

The manner in which traders bit the hand that fed them appeared to shock even regulators, who said the misconduct was unique among recent rate-fiddling scandals.

In one exchange discussing rate manipulation, a Lloyds trader wrote: “Every little helps. It’s like Tesco’s.”

Last night, Mark Carney, the Bank of England’s Governor, described the behaviour of the traders as “highly reprehensible and clearly unlawful” – particularly as Lloyds had been among the biggest beneficiaries of the Bank of England scheme they were manipulating.

In a letter to Lloyds’ chairman, Lord Blackwell, Mr Carney also warned the traders’ actions “may amount to criminal misconduct”,  and said the Prudential Regulation Authority could take further action.

Responding, Lord Blackwell accepted it was “truly shocking conduct, undertaken when the bank was on a lifeline of public support”.

Lloyds was rescued by a £20.5bn bailout during the financial crisis. Taxpayers still hold a 25 per cent stake in the bank.

The Financial Conduct Authority (FCA) said two Lloyds traders, later helped out by two traders from the Bank of Scotland, which the bank bought during the financial crisis, had tried to fix a rate to which fees for participating in the Bank of England’s Special Liquidity Scheme were linked, known as the three-month repo rate. The scheme helped to rescue the industry during the financial crisis by providing it with £200bn in short-term loans underwritten by the taxpayer to keep banks afloat and ensure they could trade and lend to customers.

The FCA described the traders’ behaviour as “misconduct of a type that has not been seen in previous Libor cases”.

Regulators also said certain managers were directly involved in the affair, or at least knew about it, and “promoted a culture on the money-market desks where such misconduct was accepted”. Lloyds was further found to have played a role in the City network that attempted to manipulate various Libor interest rates to help traders’ bets.

Regulators today released a series of embarrassing email conversations linked to the manipulations. In one exchange, a Libor submitter from the Netherlands-based Rabobank, which has already been heavily fined, said: “Morning skip… my little… [racial epithet redacted] friend in Tokyo wants a high 1m fix from me today… am going to set .37 – just for your info sir”.

A Lloyds yen submitter replied: “That suits mate as got some month end fixings so happy to ablige… rubbery jubbery :-O”.

As a result of the misconduct, Lloyds will pay $105m (£62m) to the US Commodity Futures Trading Commission, and a further $86m to the US Department of Justice for manipulation of various Libor interest rates. A further £35m has been levied by the FCA for Libor manipulation, plus £70m for the attempt to duck Bank of England charges. Lloyds will also have to pay the Bank of England nearly £8m in compensation for lost fees.

The fine represents the third-largest levied by a financial regulator in the UK. But  its impact may be limited because the City expects underlying profits of more than £3.5bn over just six months when the bank presents results for the first half of the year on Thursday.

And its shares actually edged up 0.03p to 74.84p by the day’s end, as City analysts described the Libor fine as “small beer” when set against the cost of payment-protection insurance mis-selling, for which Lloyds is expected to increase provisions to £10bn.

David Buik, a Panmure Gordon commentator, said: “I am amazed that someone has not yet gone to jail for some of these misdemeanours.”

The chairman of the Treasury Select Committee, Andrew Tyrie, said: “It was appalling behaviour like this that triggered the creation of the Parliamentary Commission on Banking Standards.”

Lloyds’ chief executive, Antonio Horta-Osorio, said: “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.”

Start your day with The Independent, sign up for daily news emails
News
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
News
Robert De Niro has walked off the set of Edge of Darkness
news The Godfather Part II actor has an estimated wealth of over $200m
Arts and Entertainment
Fearne Cotton is leaving Radio 1 after a decade
radio The popular DJ is leaving for 'family and new adventures'
Sport
Robbie Savage will not face a driving ban
football
Voices
voices
Life and Style
Nearly half of all young people in middle and high income countries were putting themselves at risk of tinnitus and, in extreme cases, irreversible hearing loss
health Nearly half of all young people in middle and high income countries are at risk of tinnitus
News
It was only when he left his post Tony Blair's director of communications that Alastair Campbell has published books
people The most notorious spin doctor in UK politics has reinvented himself
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
arts + ents
Life and Style
fashion
Arts and Entertainment
James Franco and Zachary Quinto in ‘I Am Michael’
filmJustin Kelly's latest film tells the story of a man who 'healed' his homosexuality and turned to God
News
i100
Arts and Entertainment
Public Service Broadcasting are going it alone
music
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower