Banks urged not to quit Libor panel

Banks have been told by the Financial Services Authority that they should not try to leave the panel which sets Libor because they fear becoming embroiled in the growing scandal over rate rigging.

A number of European banks including Rabobank and BNP Paribas are believed to have wanted to quit the 16-strong panel of banks which submits rates for Libor setting. The FSA is concerned that if banks pull out the stability of the market could be challenged.

The European Central Bank sent a similar warning to banks involved in setting Euribor rates last week.

Chief regulator Martin Wheatley's report into Libor suggested that banks be compelled to take part in the Libor panel to provide the widest possible range of data when setting rates.