FSA slaps Barclays with largest ever fine
The Financial Services Authority has today fined Barclays Bank a record £59.5m for misconduct relating to the London Interbank Offered Rate and the Euro Interbank Offered Rate.
According to the regulator, the fine, the largest ever imposed by the FSA, relates to breaches of requirements that encompassed a number of issues, involved a significant number of employees and occurred over a number of years.
The watchdog said Barclays’ misconduct can be divided in to three main areas:
• making submissions which formed part of the Libor and Euribor setting process that took into account requests from Barclays’ interest rate derivatives traders. These traders were motivated by profit and sought to benefit Barclays’ trading positions;
• seeking to influence the Euribor submissions of other banks contributing to the rate setting process; and
• reducing its Libor submissions during the financial crisis as a result of senior management’s concerns over negative media comment.
The FSA also said Barclays failed to have adequate systems and controls in place relating to its Libor and Euribor submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.
Finally, the banking group also failed to deal with issues relating to its Libor submissions when these were escalated to Barclays’ investment banking compliance function in 2007 and 2008.
Bob Diamond, chief executive of Barclays, has revealed he will forego his bonus this year along with other executives Chris Lucas, Jerry del Missier, and Rich Ricci.
Mr Diamond said: “The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business.
“When we identified those issues, we took prompt action to fix them and co-operated extensively and proactively with the Authorities.
“Nothing is more important to me than having a strong culture at Barclays; I am sorry that some people acted in a manner not consistent with our culture and values.”
Tracey McDermott, acting director of enforcement and financial crime, said: “Barclays’ misconduct was serious, widespread and extended over a number of years.
“The integrity of benchmark reference rates such as Libor and Euribor is of fundamental importance to both UK and international financial markets. Firms making submissions must not use those submissions as tools to promote their own interests.
“Making submissions to try to benefit trading positions is wholly unacceptable. This was possible because Barclays failed to ensure it had proper controls in place. Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.”