BBA revises Libor procedure

The British Bankers’ Association is changing the setting of its benchmark inter-bank lending rates in response to market concerns about their accuracy.

The BBA will form two sub-committees from the committee which oversees the BBA London inter-bank offered rate (Libor). One sub-committee will scrutinise the fixing process and review contributors to Libor panels, while a second will look at issues that have not been satisfactorily resolved along with the contributor.

The main committee will be expanded to include an extra non-contributing U.S. bank and European bank active in the money markets.

Earlier in the year, the BBA came under fire over the accuracy of Libor because of suspicions that contributing banks were under-reporting the rates they were required to pay for funds.

"It is appropriate in this global downturn to ensure the continued robustness of this pillar of our financial architecture," Angela Knight, BBA chief executive, said.