Britain's Treasury and financial market regulator have discussed the potential criminal implication of an investigation into the manipulation of Libor rates, a spokeswoman to British Prime Minister David Cameron has said.
Barclays will pay £290m ($453 million) to US and British authorities to settle allegations that it manipulated interest rates.
When asked if there had been any consideration about whether the manipulation of Libor could have criminal implications, Mr Cameron's spokewoman told reporters: "The issue is something that has been under discussion - the liabilities and criminal aspects."
Mr Cameron, on a trip to northern England, said the management of Barclays will have to answer some "serious questions" over the investigation.
The settlement raises fresh questions about the reliability of the Libor.
The attempted manipulation, which according to authorities took place from 2005 through 2009, meant that millions of borrowers paid too little or too much interest on their debt.
The London Interbank interest rate underpins some $360 trillion of loans and financial contracts worldwide.
The US government implicated senior executives at Barclays in its settlement. It cited reams of emails that showed how the bank sought to move Libor rates to profit on trades and to hide its high borrowing costs during the financial crisis.
Barclays Chief Executive Bob Diamond acknowledged on Wednesday that the settlement would damage customer trust in the bank.
He said he and other senior executives would forgo their bonuses this year. Much of the improper trading and manipulation occurred under the watch of Diamond, a fixed-income trader who replaced John Varley as CEO in 2011.
Libor underlies everything from derivatives trades to US consumer credit card rates to loans as far afield as those financing Turkish phone networks. Barclays also tried to manipulate Euribor, a separately managed series of euro-denominated rates.
The bank settled on a civil basis with the US Commodity Futures Trading Commission, the U.S. Department of Justice and the U.K.'s Financial Services Authority. The Justice Department is still conducting a criminal investigation.
The broader Libor probe dates to at least 2011 and includes Japanese, Canadian and Swiss authorities.
Last year, Swiss bank UBS AG agreed to co-operate with U.S. investigators in exchange for conditional immunity from prosecution.
Earlier this year, in court documents filed in Ontario Superior Court, a Canadian antitrust regulator said that a "co-operating party" had provided information on how the alleged Libor manipulation took place.
Investigators were helped by the extensive email traffic among Barclays employees involved. In one email, after a Barclays swaps trader asked for low levels to be reported on certain short-term rates, an employee who submitted rates for the survey responded by email, "Done ... for you big boy ..."
Market participants said that fewer traders have faith in Libor as a benchmark now.
The series of interest rates are determined based on a daily poll of banks regarding their estimated borrowing costs. Libor is so deeply entrenched in financial markets that there are few plausible alternatives, experts have said.
