BBA Libor review due but few changes seen

By Ian Chua

LONDON (Reuters) - An annual review on Friday into the way Libor is set is expected to recommend tweaks rather than drastic changes, despite concern that the process has become seriously distorted by the global credit crisis.

The British Bankers Association is set to unveil the findings of the review into the leading global interest rate benchmark around 5 p.m.

The BBA has given no indication whatsoever on what the review might yield and has even suggested there might be no statement at all.

"The convention is that after the meeting the statement is released. If a statement were to be made it'll be after the close of play of London business, so five o'clock thereabouts," said a press officer at the BBA.

The hallmark is likely to be caution about reforms so as not to destabilise markets that use London interbank offered rates as a reference.

Trillions of dollars worth of financial derivatives contracts globally like interest rate swaps and Eurodollar futures are referenced to Libor.

Just this week alone, overnight dollar rates have leapt more than 40 basis points as U.S. investment banks hoard as much cash as they can to dress up balance sheets ahead of the end of their second quarter on Friday.

"The press seems to think there will be some kind of 'report'. The most likely scenario is that the BBA - cautious as ever - tables ideas at the meeting and asks for feedback, etc.," analysts at Societe Generale said in a note on Friday.