Osborne accused of linking innocent banks to scandal
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Wednesday 04 July 2012
George Osborne last night stood accused of being reckless when he wrongly named two major banks as being under investigation for the Libor rate-fixing scandal.
As Barclays' share price plunged more than 20 per cent after revelations of its involvement in the scandal, the Chancellor stood up in parliament and, in what appeared to be a scripted answer to a question from a Conservative MP, named four other banks being investigated in the UK.
The statement was made on Thursday, 24 hours after the Barclays fines were announced, giving the Chancellor plenty of time to get his facts right.
The Independent reported yesterday how HSBC was furious to have been named when it, in fact, was not being investigated by the UK authorities. Now it has emerged that one of the other banks Mr Osborne cited, Citigroup, is also not under investigation here.
The banks are particularly angry because the Treasury refuses to issue any sort of retraction. Instead, concerned investors and media have been told to contact the Financial Services Authority for "guidance" about the true state of affairs – that the pair are not subject to any investigation.
One banker told The Independent: "It is completely reckless in these febrile times that the Chancellor should completely wrongly name banks as being investigated for what could be criminal activity. Look at what happened to Barclays shares. The Chancellor should be completely upfront and admit he has made a mistake and clarify it."
The Treasury has refused requests from the banks to clarify the error, claiming the Chancellor did not specifically state that the banks were being investigated by the FSA.
But a Hansard transcript shows his statement was unambiguous: "HSBC and RBS are two of the banks under investigation, but international banks such as UBS and Citigroup are under investigation too, partly for activities conducted in this country," he said.
HSBC says it is not being investigated anywhere in the world, although it has, along with all other banks providing quotes for the Libor setters, been asked to supply certain documents. Citigroup declined to comment on investigations in other jurisdictions but is definitely not being probed in the UK.
The Treasury's refusal to clarify the situation puts the FSA in a difficult position: under its rules it is not allowed to publicly state whether firms are being investigated or not.
The fiasco has one silver lining: HSBC and the US-based Citi, can now boast of being the only two Libor panel members to have been cleared of wrongdoing by the regulator.
HSBC shares fell 15p to 558p on the day of the Chancellor's statement. It has since recovered to open this morning at 570.3p.
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