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The Financial Services Authority (FSA) has fined Barclays Bank a record £59.5m for manipulating the interest rates at which banks lend to each other.
Barclays chief executive Bob Diamond and three other of the banks' most senior executives will forgo their bonuses for this year.
Including the record FSA fine, Barclays has agreed to pay penalties totalling £290m to UK and US authorities.
Barclays said its actions "fell well short of standards".
The FSA said: "Barclays' misconduct was serious and widespread."
Barclays has admitted that a group of traders lied about what it was costing the bank to borrow.
Now, why does this matter?
It matters because lots and lots of deals involving clients of Barclays used the interest rate into which Barclays was feeding this information, about its own borrowing costs, to determine the profit and loss on their own deals.
It's quite hard to think of behaviour by a bank as shocking as this: not telling the truth about what it is costing you to borrow, that then becomes a benchmark for pricing other deals.
From the FSA' breakdown of Barclays traders caught in the act of manipulation: On Friday, 10 March 2006, two US dollar Derivatives Traders made email requests for a low three month US dollar LIBOR submission for the coming Monday: i. Trader C stated “We have an unbelievably large set on Monday (the IMM). We need a really low 3m fix, it could potentially cost a fortune. Would really appreciate any help”;
Our advice to anyone who had an adjustable rate mortgage in the period between 2005 and today: sue the living feces out of Barclays, and all other banks who crawl out of the woodwork with purported settlements. Because due to their undisputed mark manipulation, it is absolutely safe to say that ARMs, which rely on Libor for interest rate formation, were grossly manipulated by the same idiot traders who left written evidence of their manipulation year after year. Now it is their turn to pay.
71. On the majority of occasions where Barclays’ Submitters were contacted by Barclays’ Derivatives Traders with requests, Barclays’ submissions (for US dollar LIBOR and EURIBOR) were consistent with those requests: i. the FSA analysed 111 requests made by Barclays’ Derivatives Traders in the period from 3 January 2006 to 6 August 2007 relating to US dollar LIBOR submissions. On around 70% of those occasions the submissions were consistent with the requests. On 16% of occasions it was unclear if the submissions were consistent with the requests. On 14% of occasions the submissions were inconsistent with the requests; and ii. the FSA analysed 42 requests made by Barclays’ Derivatives Traders in the period from 23 February 2006 to 3 June 2008 relating to EURIBOR submissions. On 86% of those occasions the submissions were consistent with the requests. On 2% of occasions it was unclear if the submissions were consistent with the requests. On 12% of occasions the submissions were inconsistent with the requests.