Regulators close to fining Lloyds over Libor ‘rigging’

Significantly, Lloyds was not among the banks accused by the European Union’s competition authorities of operating a cartel to fix euribor and yen Libor rates

Lloyds looks set to be the next banking group to be hit with a heavy fine over alleged attempts by traders to manipulate Libor interest rates.

UK and US regulators have not penalised a bank since imposing a $1bn (£580m) fine last October, along with watchdogs  in the Netherlands, on the Dutch bank Rabobank.

However, discussions between regulators and Lloyds are reportedly now close to a conclusion, although it could still take a number of weeks for the part-state-owned lender to finalise a deal.

Lloyds’ penalty is expected to be at the lower end of the range of those imposed on banks. The biggest so far was the $1.5bn (£900m) fine for UBS in 2012, with Barclays, Royal Bank of Scotland and the broker Icap being hit with smaller penalties.

Significantly, Lloyds was not among the banks accused by the European Union’s competition authorities of operating a cartel to fix euribor and yen Libor rates. They imposed penalties totalling €1.7bn (£1.35bn) on eight banks. Another group of banks, and Icap, have opted to fight the EU. 

Since Rabobank was penalised, the only fine to be imposed by the Financial Conduct Authority (FCA), the City regulator, was a relatively small one for the broker RP Martin for “aiding and abetting” traders’ attempts to rig rates in exchange for payments and continued business. It was ordered to hand over $2.3m in instalments to the FCA and America’s Commodity Futures Trading Commission, although the penalty would have been triple that had the broker been able to afford it.

A Lloyds spokesperson said: “As we have disclosed, Lloyds Banking Group continues to receive requests for information from a number of government agencies with regard to their investigations into interbank offered rates (including Libor). We are co-operating with those investigations. If required, the group would update the market as appropriate.”

Settling any Libor-related issues would be viewed favourably by the Government, which has been steadily selling down its stake in Lloyds. The state now holds just 24.9 per cent of the shares after a second sale in March realised £4.2bn for the taxpayer. The shares closed at 72.87p yesterday.

The City’s attention has been focused more recently on other potential scandals related to pricing benchmarks  such as the continuing investigation into alleged data sharing and attempts to fix foreign exchange rates.

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