HSBC settles US private Libor claims

HSBC Holdings Plc has agreed to pay $100m (£71.3m) to settle private litigation over the Libor rigging scandal in the US, according to Reuters.

The bank is the fourth major company to settle claims that employees conspired to manipulate the Libor benchmark interest rate. The settlement is subject to court approval and was filed at the US District Court in Manhattan, New York.

HSBC has denied wrongdoing in the affair, but said it had settled the claims to reduce risk and avoid the cost and distraction of ongoing litigation.

The London Interbank Offered Rate or Libor is used to set rates on a vast array of products including credit cards, mortgages, student loans and other transactions. It sets the cost of banks borrowing from another.

Bankers were accused of fixing the rate by investors including the city of Baltimore and Yale University. The UK Financial Conduct Authority has said Libor will be phased out by the end of 2021.

Deutsche Bank settles US Libor case

Deutsche Bank AG has agreed to pay $240m to settle accusations that it conspired to fix the Libor benchmark interest rate with other banks, according to Reuters.

On Tuesday, the preliminary settlement, which is subject to judicial approval, was disclosed in court papers at the US District Court in Manhattan.

Deutsche Bank is the third consumer bank to reach a settlement of private US antitrust litigation over Libor. Citigroup reached a $130m settlement along similar lines last July, while Barclays Plc settled its Libor lawsuit for $120m in November 2015.

The London Interbank Offered Rate or Libor is a figure used by banks to set rates on huge volumes of credit cards, mortgages, student loans and other transactions and to set the rate of interbank lending.

Investors including Yale University and the city of Baltimore had accused 16 banks of conspiring to manipulate the rate in private litigation initiated in 2011. Worldwide, banks have paid around $9bn to settle Libor-rigging claims.

The head of the UK Financial Conduct Authority has said Libor will be phased out from the end of 2021, due to a lack of data underpinning it.

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”.