March 9, 2012 / 1:09 PM / 8 years ago

Barclays says may face action in Libor probe

LONDON (Reuters) - Barclays may face regulatory action relating to the global investigation into Libor lending rates and is in talks about a resolution with some of the authorities involved, it said in its annual report on Friday.

Meanwhile Royal Bank of Scotland said in its annual report that some of its staff were also being investigated but it had substantial defences to claims arising from the probe.

Financial Services Authority, the U.S. Securities and Trading Commission, the European Commission, the U.S. Department of Justice and the Japanese Financial Services Authority are among the authorities who have approached banks around the world to investigate their involvement in determining Libor rates.

“Barclays has been informed by certain of the authorities investigating these matters that proceedings against Barclays may be recommended with respect to some aspects of the matters under investigation, and Barclays is engaged in discussions with those authorities about potential resolution of those aspects,” the bank said in its annual report.

“It is not currently possible to predict the ultimate resolution of the issue,” it added.

The bank declined to make any further comment.

On Wednesday French bank Societe Generale said in its annual report that it too had been contacted as part of the probe.

Citigroup, HSBC and UBS have also been involved in the investigation. Several have suspended traders but there have been no criminal charges.

Reuters revealed in February that the U.S. Justice Department’s probe had become a criminal one, however.

The London Interbank Offered Rate, known as Libor, is the benchmark for around $360 trillion (229.63 trillion pounds) worth of financial contracts worldwide. The daily poll asks banks at what rate they think they will be able to borrow money from each other in 10 major currencies and for 15 borrowing periods ranging from overnight loans to 12 months.

As the credit crisis took hold, allegations started mounting that Libor no longer reflected reality and authorities undertook to examine whether traders at the banks tried to influence whether the rate went up or down in order to profit on bets on the direction it would go.

Like the credit ratings agencies whose role has been under fire both during and after the initial stages of the financial crisis, there are few credible alternatives to replace a system many now regard as outdated and discredited.

On Wednesday the country’s banking trade body said it had no plans to cede oversight of Libor to regulators, saying it remained fully committed to the interbank lending rates.

Barclays also said in its annual report it had been named as a defendant in a number of class action lawsuits filed in U.S. federal courts, while RBS said “certain members” of the RBS group had been named as defendants, also in the United States.

Barclays said the claims against it allege that between 2006 and 2009, “Barclays and other banks individually and collectively violated U.S. antitrust and commodities laws and state common law by suppressing LIBOR rates”.

RBS, meanwhile, said it had “substantial and credible legal and factual defences to these and prospective claims.”

The government-controlled lender added that the type of information authorities were seeking included documents to the process and procedures for setting Libor and other interest rates, together with related trading information.

UBS, another bank cooperating with the authorities, publishes its annual report next week.

Writing by Sophie Walker; Editing by Alexander Smith and Greg Mahlich

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