COPENHAGEN (Reuters) - The Danish Bankers Association (DBA) will seek to reassure investors that the country’s key interest rate is set accurately, the group said on Tuesday, after the Libor scandal shook confidence in its Danish equivalent.
The DBA, which calculates, publishes and collects data for the Copenhagen Interbank Offered Rate, estimated between 5,000 billion (531 billion pounds) and 7,500 billion Danish crowns worth of financial contracts and securities had been issued based on Cibor rates.
“Confidence is decisive for reference rates and we therefore recognise that the bank’s confidence in the Cibor is not enough,” DBA chief Jorgen Horwitz said in a statement.
“It is therefore important for the Bankers Association that we, together with the users, strengthen confidence in the reference rate,” Horwitz said.
Interbank rates are set in financial centres around the world for a range of currencies, and are used as benchmarks to help set prices for home loans, credit cards and derivatives products.
In a review published on Tuesday, the DBA said it believes the setting of the rate is accurate but will increase the transparency of its procedures, work to find more banks to contribute in the setting of the rate, and support the establishment of a public supervisory body to track the setting.
Seven banks currently contribute to the setting of the rate, which Nordea Bank NDA.STNDA.CO has estimated is the basis for about a fifth of home loans in Denmark.
Barclays Plc (BARC.L) last month pulled out of the rate-setting panel for Cibor, the second panel the British bank has quit after being rocked by the interest rate rigging scandal.
The Danish Central Bank, Nationalbanken, had collected, calculated and published the Cibor rate until April last year when it pulled out saying it did not feel able to evaluate whether the contributing banks’ daily reporting of the rate was fair.
Nationalbanken has said replacing Cibor is not realistic due to the large amount of outstanding contracts.
Business and Growth Minister Ole Sohn is expected to publish a separate inquiry into the setting of Cibor later this month.
Reporting by Mette Fraende; Editing by Ruth Pitchford