Rate-rigging investigation gathers pace in Europe

Investigations into the attempted manipulation of benchmark interest rates are focusing on four European banks, the Financial Times reported today.

It’s claimed that evidence of links to the scandal at Crédit Agricole, HSBC, Deutsche Bank and Société Générale are being examined.

The inquiry into alleged attempts to manipulate the London Inter-Bank Offered Rate (Libor) and its eurozone equivalent, the Euro Interbank Offered Rate (Euribor), comes after Barclays plc (LSE:BARC) was fined GBP290m by UK and US regulators for its involvement in the misconduct.

Soon after the scandal engulfed Barclays its chairman, Marcus Agius, and chief executive, Bob Diamond, announced their resignations.

According to the FT, a statement from the Commodity Futures Trading Commission, the US futures regulator, claimed that an unnamed trader at Barclays had “orchestrated an effort to align trading strategies among traders at multiple banks” and this was done “in order to profit from their futures trading positions”.

So far no official allegations have been made against any banks apart from Barclays, but regulators on both sides of the Atlantic are continuing to investigate other institutions.

A BBC report today said that authorities further afield are also looking at the issue, with an investigation being launched in South Korea over possible rate-fixing and Singapore and Hong Kong announcing reviews of the way inter-bank benchmark rates are set.

With calls growing in Europe and the United States for reform of the Libor system, Sir Mervyn King, governor of the Bank of England, has proposed that central bank governors and regulators should discuss ideas for “radical reforms” at a meeting in September.

US Treasury Secretary Tim Geithner agreed that international efforts are needed and said that the reforms would not be left “completely to the British”.