By Kirstin Ridley and Philipp Halstrick
LONDON/FRANKFURT Feb 7 The United States and
Britain will by mid-year levy more fines against those alleged
to have been involved in interest rate rigging, with broker ICAP
and U.S. bank Citigroup among names in the
spotlight, sources close to the probe said.
"There will be more in the first half of this year," said
one source with knowledge of the complex probe that is involving
more than a dozen of the world's top banks and brokers. "Things
are progressing ... and you will see a lot more this year."
A separate source close to the investigation said JPMorgan
Chase and Germany's Deutsche Bank are in
focus alongside ICAP and Citigroup after UK and U.S. regulators
fined Britain's Royal Bank of Scotland on Wednesday.
U.S. and UK regulators have fined three banks to date - RBS,
Britain's Barclays and Switzerland's UBS - a
total of $2.6 billion for allowing traders to game Libor
interbank rates in a global scam.
The regulators' timetable is an indication the probe is
gathering pace, as investigators piece together evidence to
ascertain which traders at which banks and brokerages attempted
to manipulate Libor, the London interbank offered rate.
Reams of emails and computer message exchanges released by
regulators allege traders colluded for years with peers at other
banks and brokers to rig Japanese, Swiss and U.S.-denominated
Libor, a benchmark used to price some $500 trillion worth of
contracts from derivatives to credit cards.
"Deutsche, Citi and JPM are the banks named in regulatory
circles as those candidates near the next settlements," said the
The three banks declined to comment.
BROKERAGES FEEL HEAT
Regulators have also said up to five interdealer brokers --
firms which take a commission for matching buyers and sellers of
financial instruments -- helped traders rig rates.
A third source, who also declined to be named because the
matter remains confidential, said that UK interdealer broker
ICAP was firmly on the regulatory radar screen.
ICAP confirmed in January that the FSA was investigating one
of its subsidiaries over Libor.
The brokerage said on Thursday it had suspended one trader
and put three on administrative leave in connection with its own
internal Libor investigation but declined to elaborate further.
ICAP also declined to comment on whether the group expected
a regulatory fine - or when investigations would be concluded.
Deutsche Bank on Tuesday suspended five traders suspected of
inappropriate conduct after an internal investigation into
possible manipulation of Libor's euro equivalent Euribor.
The bank, which has already set aside nearly 2 billion euros
to cover legal liabilities including possible Libor-related
costs, suspended two traders last year for Libor misconduct. It
declined to comment on any fine, beyond reaffirming that it is
cooperating with authorities.
A German fine, however, is likely towards the end of the
German regulator BaFin only began an in-depth Libor probe
into Deutsche Bank last year -- around four years after the
Washington-based Commodity Futures Trading Commission (CFTC)
initiated an industry-wide investigation into dollar Libor.
BaFin is expected to finalise its report by early March,
financial sources said. That report can then provide the meat
for a transatlantic settlement.
"Any settlement talks with Deutsche Bank can only start when
this report is finished," noted one German financial source.
BaFin said it is in the process of evaluating the results of
its investigations, with conclusions due in the coming weeks.
"Special probes were launched in some cases," the head of
the German financial watchdog Elke Koenig told Reuters.
"We are fully on schedule. The investigators have to do some
follow up work on some of the reports," she said.
The U.S. CFTC, the Department of Justice and Britain's FSA
are the only regulators to have cooperated to together fine
banks over Libor in transatlantic settlements. But talks can be
tortuous and complex, regulatory and bank sources have warned.