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Daily Digit: £37m Barclays Libor test case

Tuesday, October 30, 2012 - 01:42

Oct. 30 - The figure Barclays is being sued for over the alleged mis-selling of interest rate hedging products. It's the first bank to face trial in a British court over the damages stemming from manipulation of the Libor interets rate. Sonia Legg reports.

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Barclays is the first bank to face trial in a British court over the damages stemming from manipulation of the Libor interest rate 37 million pounds - or $59m - is today's daily digit in Europe. It's the amount Barclays is being sued for over Libor interest rate fixing. The UK bank has been ordered to stand trial in a British court over damages stemming from rate manipulation. Guardian Care Homes says it incurred losses after signing up for interest rate hedging products. The so-called swaps were supposed to protect companies against rising interest rates. But many found they were tied into costly deals meaning they didn't benefit when rates fell. In June Barclays agreed to set aside $450m to settle rate fixing allegations. This trial - says banking analyst Ralph Silva - will serve as a test case for thousands of small British firms who believe they were victims of rate manipulation. (SOUNDBITE) (English): RALPH SILVA, BANKING ANALYST, HSF RESEARCH, SAYING "There's a court that's going to judge if there was some mis-selling involved. This could be as big as the PPI situation in the UK if that happens and secondly and more importantly is that a judge may try to determine how much of a difference the Libor manipulation had - now if this judge says there was a manipulation of 0.1 percent - or whatever number he chooses - every product that has an effect on Libor is going to go after them in the courts to try and get their money back so this is hugely important for the industry." Britain's financial regulator estimates around 44,000 interest rate swaps have been wrongly sold to UK companies since 2001. And more than a dozen other banks are still being investigated over Libor manipulation. But Barclays says the case has no merit as Guardian entered into the swaps with "sufficient understanding."

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Daily Digit: £37m Barclays Libor test case

Tuesday, October 30, 2012 - 01:42