(Reuters) - Libor, the London interbank offered rate, is the global benchmark for interest rates on everything from credit cards to trillions of dollars in financial derivatives and is at the heart of a global scandal over rate rigging.
Libor rates are based on daily estimates from a group of banks as to how much they would expect to pay to borrow funds from each other for a range of currencies and periods.
Below is a look at Libor and the scandal.
1969 - An $80 million loan for the Shah of Iran becomes one of the first pegged to a benchmark set by the group of bankers behind the deal. They call it a London interbank offered rate.
1986 - The British Bankers’ Association (BBA) publishes the first official Libor rates in U.S. Dollars, Yen and Sterling, meeting demand for global benchmarks from financial markets.
2007 - Barclays (BARC.L) alerts U.S. regulators about its concerns that other banks are submitting dishonestly low interbank rates.
June 2008 - U.S. Treasury Secretary Timothy Geithner, then head of the New York Fed, raises concerns over Libor with the Bank of England, which passes the message to the BBA.
September 2008 - Libor rates spike after the collapse of Lehman Brothers at the height of the global financial crisis. Rate setting at the time is central to investigations of rigging.
2010 - Britain’s Financial Services Authority launches an investigation into Barclays as part of a global probe into the industry over allegations of manipulation.
August 2011 - Discount brokerage and money manager Charles Schwab Corp (SCHW.N) files lawsuits accusing 11 major banks of conspiring to manipulate Libor.
June 2012 - Barclays fined $455 million in a settlement with U.S. and British regulators over rigging rates. Britain announces a review of the way Libor is calculated.
July 2012 - Barclays CEO Bob Diamond and chairman Marcus Agius quit over the scandal. Agius keeps a caretaker role. Class action brought by investors against Barclays and other banks over rigging.
August 2012 - A joint New York-Connecticut investigation of Libor has sent subpoenas to Royal Bank of Scotland Plc, HSBC Holdings Plc (HSBA.L), JPMorgan (JPM.N), Deutsche Bank (DBKGn.DE), Barclays, UBS AG UBSN.VX and Citigroup Inc (C.N). The subpoenas seek communication between executives related to possible collusion that may have played a role in alleged rate manipulation.
September 2012 - The BBA says it will support any recommendation by Martin Wheatley, the Financial Services Authority’s managing director, for a change of responsibility in setting the rate. He will issue recommendations on September 28.
Thomson Reuters (TRI.TO), parent company of Reuters, has been calculating and distributing the rates for the BBA since 2005, when it acquired previous calculating agent Telerate.
Reporting by David Cutler and Kirstin Ridley;