Economy
Mark Carney: Lloyds’ behaviour ‘clearly unlawful’
Bank of England governor Mark Carney has stated that Lloyds has clearly behaved unlawfully after it was revealed that traders have been manipulating interest rates in order to cut the fees it must pay after being bailed out during the financial crisis.
On Monday it was revealed that the Lloyds Banking Group had been fined £218 million by the Financial Conduct Authority (FCA) and US regulators for serious misconduct. The fines relate to the Libor rate rigging scandal, the Special Liquidity Scheme (SLS) and the Repo Rate benchmark.
By rigging fees payable to the Bank of England under the SLS government programme that supported banks during the financial crisis, which was taxpayer-backed, the group was attempting to reduce its payments. The manipulation has been described as “highly reprehensible” by Carney.
In a statement Lloyds has said that it condemns the actions of the individuals responsible for the conduct in question. It adds that it regards the behaviour as “totally unacceptable and unrepresentative of the cultural changes that the group has implemented”.
In a letter Carney states, “Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved. It reduced not only the amount of fees payable by the firms but also the fees payable by other firms using the SLS. The bank’s calculations show that the total reduction in fee received by the bank may have been as high as £7.76 million.”
He added that in light of the seriousness of the matter, the Prudential Regulation Authority (PRA) would now consider whether further action should be taken in relation to the firms or individuals at the firms.
The Bank of England also added that the news was yet another demonstration for the “pressing need” of a review into how to restore public confidence in wholesale financial markets and ensure the highest standards of conduct by its participants. The Fair and Effective Markets Review was announced in June with the aim of tackling these issues. The bank, in conjunction with the FCA and Treasury, will lead it.
Photo: Lloyds Banking Group
Further reading:
Lloyds Bank fined £281m over Libor scandal
Lloyds Libor-rigging scandal settlement reaches late stage
Six more traders to face criminal charges for Libor rigging
Bob Diamond among Barclays execs called to give evidence in Libor trial