Lloyds close to agreeing Libor settlement

Friday 25 July 2014 10.50
Lloyds reportedly faces fines of between £200m and £300m
Lloyds reportedly faces fines of between £200m and £300m

Lloyds Banking Group has confirmed that it is close to agreeing a settlement over allegations related to the rigging of interest rate benchmarks.

The bank, which is 25% owned by the British taxpayer, said it was "in late-stage settlement discussions with a number of agencies".

It has been reported that Lloyds could pay fines of between £200m and £300m before the bank posts its half-year results next Thursday.

A number of banks across Europe and the US have been fined billions of pounds in settlements relating to the fixing of benchmark rates.

Libor is used for hundreds of trillions of dollars' worth of loans and transactions around the world and has been calculated using submissions from panels of banks about the rates at which they believe they can borrow every day.

Lloyds is expected to pay its fines to the Commodity Futures Trading Commission and Department of Justice in the US and the Financial Conduct Authority in Britain.

The penalties are expected to be accompanied by extracts from emails that allegedly show traders discussing how to manipulate Libor benchmarks between 2006 and 2009.

The settlement clears up a crucial area of uncertainty ahead of the Government's plan to sell a further stake in Lloyds to both institutional and retail investors later this year.

Barclays was the first to settle allegations of manipulating Libor, paying £290m of fines in 2012. This triggered political uproar that ultimately led to the departure of Bob Diamond, the then Barclays chief executive.

In Britain, Royal Bank of Scotland has also been fined as have smaller brokers such as ICAP and RP Martin.

Financial watchdogs in Britain and the US continue to investigate a number of major banks around the world over Libor interest rate-rigging.