Arab Today, arab today britain to review bank rate setting after scandal
Last Updated : GMT 01:44:06
Arab Today, arab today
Arab Today, arab today

Britain to review bank rate setting after scandal

Arab Today, arab today

Arab Today, arab today Britain to review bank rate setting after scandal

London - AFP

Britain will hold a review into the setting of benchmark inter-bank interest rates and seek to criminalise rate-fixing, the finance ministry said Saturday in the wake of a scandal at major lender Barclays. The independent review aims to restore trust in Libor, a key benchmark reference rate that influences a swathe of other borrowing costs, after Barclays was hit with a record fine for attempted manipulation. \"We\'ve set up an independent review into the regulation of Libor that will also look at the sanctions that should be in place if someone seeks to manipulate Libor,\" Treasury Minister Mark Hoban told BBC television. \"(We will) get it to report as a matter of urgency, to make the changes that are necessary to ensure that people have confidence in Libor and also that people are confident that if traders seek to manipulate Libor in the future, that there will be criminal sanctions in place.\" The news that Barclays traders tried to fix Libor rates has rocked the City of London financial district. It also wiped billions off Barclays\' market value in a week when British banks were separately sanctioned for mis-selling interest rate insurance. The two scandals have fuelled public ire against an industry already resented for its role in the 2008 financial crisis and for big bonuses paid to top executives -- prompting cabinet ministers to signal a regulatory crackdown. Barclays chief executive Bob Diamond has been summoned to testify before parliament\'s powerful Treasury Select Committee on Wednesday, but has so far resisted calls for his resignation. More details of the Libor review will be announced next week, while the government will look to add its recommendations to a financial services bill currently undergoing scrutiny by parliament, Hoban said. The attempted rate-fixing took place between 2005 and 2009, with traders submitting false information about Barclays\' borrowing rates to make the bank look more secure or, in some cases, to turn a profit. Barclays was fined £290 million ($452 million, 362 million euros) Wednesday in the ongoing probe by US and British authorities into several banks that help set the Libor and Euribor rates -- benchmark figures compiled from rates that banks pay to each other for loans. The Libor and Euribor play a major role in international financial markets, and are linked to the level of borrowing costs passed on by banks to businesses and consumers for products such as mortgage loans. The Financial Services Authority (FSA) currently lacks the power to impose criminal prosecutions for manipulating Libor but has said it is in discussions with Britain\'s Serious Fraud Office over the case. Justice Secretary Ken Clarke on Saturday called for criminal prosecutions of bankers and urged stronger regulation despite stiff opposition from the financial sector. \"We are very bad at prosecuting financial crime in this country,\" Clarke told BBC radio. \"I suspect financial crime is easier to get away with in this country than practically any other sort of crime. \"This is still being investigated, no doubt, but once these investigations are complete, if they have committed criminal offences they should be brought to trial.\" Clarke said the mis-selling of interest rate hedging products, which on Friday led to four British banks being ordered to compensate businesses, amounted to \"obtaining money by deception\". The FSA said Friday it had reached agreement with Barclays, HSBC, Lloyds and Royal Bank of Scotland (RBS) \"to provide appropriate redress\" for mis-selling the specialist insurance, which it said had a \"severe effect\" on small and medium-sized firms. Clarke joined other ministers and Bank of England Governor Mervyn King in calling for a change of culture in banking, while main opposition leader Ed Miliband labelled the industry \"institutionally corrupt\". \"There hasn\'t been a proper reckoning for what happened in the banking crisis. The bankers told us, \'It\'s all fine, we\'ve cleaned everything up\', and I\'m afraid that just doesn\'t hold water any more,\" Miliband, who leads the Labour party, told the Times newspaper. A computer problem at RBS, which is majority-owned by the British government after a bailout following the financial crisis, meanwhile left millions of customers unable to complete transactions for up to four days last week.

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