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Home > Regulation > UK Regulation

Libor banks face court action in New York

US mortgage provider Fannie Mae has launched legal action against nine banks to recoup $800m (£500m) it claims to have lost as a result of the Libor-rigging scandal.

By Kevin White | Published Nov 06, 2013 | comments

The US government-backed mortgage finance giant filed a case in New York last Thursday which accused Barclays, RBS, Rabobank, UBS, Bank of America, Citigroup, Credit Suisse, Deutsche Bank and JP Morgan of colluding to artificially lower the Libor rate between 2007 and 2010.

It alleges that the collusion led it to lose money on interest rate swaps, mortgages and mortgage-backed securities, with a $332m (£208m) loss just from interest rate swaps.

Also named in the case is the British Bankers’ Association which until July this year compiled and reported the data until the New York Stock Exchange won the tender to take over Libor reporting. A spokesman for the BBA declined to comment on the case.

A spokesman said: “Fannie Mae filed this action to recover losses it suffered as a result of the defendants’ manipulation of Libor. We have a responsibility to be good stewards of our resources.”

Fellow US-government backed lender Freddie Mac filed a similar action in March against 15 Libor-setting banks.

Barclays was fined £290m by UK and US regulators in June 2012 for its role in the fixing of Libor, leading to the eventual resignation of chief executive Bob Diamond.

UBS was fined £940m in December 2012 while RBS was hit with a £390m fine in February 2013.

Last week the FCA fined Rabobank £105m for “serious, prolonged and widespread” misconduct relating to the Libor.

SFO investigation

Meanwhile, the Serious Fraud Office has widened the net of its investigation into the Libor scandal with a further 22 people under investigation. A former UBS trader and two ex-brokers accused of being involved in a plot to manipulate Yen Libor rates appeared at Southwark Crown Court last month at the start of a trial which is ongoing.

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Chris Dunston, chartered financial planner for Devon-based Artavia Personal Financial Services, said: “Libor fixing is wrong and this has affected everyone who has taken out a loan. Individuals involved should be made to repay their bonuses.”

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