LONDON (Reuters) - Britain’s main bank lobby group said members had approved handing over the running of Libor interest rates to a new operator, after it was stripped of overseeing the benchmark following a rigging scandal.
Britain’s financial regulator said in September the British Bankers’ Association (BBA) had been careless and stripped it of its governance and oversight of the Libor benchmark.
An independent body will be selected by open tender, run by Sarah Hogg, to start running Libor this year.
Hogg chairs Britain’s Financial Reporting Council, the independent corporate governance regulator.
The BBA said members gave formal approval for the transfer to a new operator at an extraordinary general meeting on Monday.
“The absolute priority is to ensure the provision of a reliable benchmark which has the confidence and support of all users, contributors and global regulators,” a spokesman said.
A review of Libor - the London interbank offered rate - by the Financial Services Authority (FSA) in September laid out a 10-point plan to restore confidence in an interest rate used to price trillions of dollars of financial products from mortgages to derivatives contracts.
The review said there were no better alternatives now and the transition to a new benchmark would be difficult because Libor is so deeply embedded in the financial system.
Three banks - Barclays (BARC.L), Royal Bank of Scotland (RBS.L) and UBS UBSN.VX - have been fined a total $2.6 billion for manipulation of rates, and more banks who contribute to the panel are being investigated, discrediting the benchmark.
Thomson Reuters (TRI.TO), parent company of Reuters, has a contract to calculate and distribute Libor rates for the BBA.
Reporting by Steve Slater; Editing by Dan Lalor