The bank scandals just do not end, this time it is interest rates.
This Friday British authorities announced that criminal proceedings have begun against 10 bankers accused of manipulating a global benchmark interest rate.
According to a statement from the UK’s Serious Fraud Office, 10 former Barclays and Deutsche Bank employees have been accused of manipulating the euro interbank offered rate, also known as Euribor. Although other bankers have been accused of manipulating interest rates, this is the first case related to Euribor, notes Tim Wallace for The Daily Telegraph.
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Benchmark interest rate manipulation could lead to more fines for banks
The Serious Fraud Office prosecutes financial crime in Britain, and has previously charged over a dozen people as part of its investigation into manipulation of the London interbank offered rate, known as Libor. The resulting scandal enveloped some of the largest banks in the world and led to billions of dollars in fines, with Barclays, the Royal Bank of Scotland, UBS and Deutsche Bank a;; implicated.
Libor is a similar benchmark interest rate, and the investigation could have serious implications for top banks. The defendants are expected to appear at Westminster Magistrates’ Court, London, in January.
The accused ex-Deutsche Bank staff are Christian Bittar; Achim Kraemer; Andreas Hauschild; Joerg Vogt; Ardalan Gharagozlou; and Kai-Uwe Kappauf. The ex-Barclays staff are Colin Bermingham; Carlo Palombo; Philippe Moryoussef; and Sisse Bohart.
Further accusations expected as a result of ongoing investigation
A spokesman for the fraud office informed the press that it would not be able to provide any more details about the investigation until the defendants made their first court appearance. According to the fraud office the investigation is ongoing and “criminal proceedings will be issued against other individuals in due course.”
The Euribor benchmark interest rate is drawn up by the world’s largest banks. Each bank sends in an interest rate every day, which represents the cost of lending to another bank. Other financial firms then use this rate to price loans to other actors, including businesses and mortgage customers.
In August former Citigroup and UBS banker Tom Hayes was convicted by a UK court of conspiracy to defraud the Yen Libor process, and was sentenced to 14 years in prison. The defendants in the Euribor case must be hoping that the courts don’t hand down similarly stiff sentences amid an ongoing backlash against bankers.