Skeletons in the closet: Carney slams Lloyds' 'reprehensible' rigging

Banks would love to finally put their financial crisis woes behind them, but they're not done paying their dues just yet.

by Rachel Savage
Last Updated: 29 Sep 2014

Now it turns out Lloyds fixed the rate used to calculate how much it owed the British taxpayer for financial crisis life support. Talk about biting the hand that feeds you. It’s been hit with a total of £226m in fines from UK and US regulators and paybacks to the Bank of England for rigging that and Libor.

The Financial Conduct Authority is continuing to flex its muscles, slapping the bank with a £70m fine for rigging the Repo Rate, the benchmark for how much it was paying the Bank of England to access the emergency Special Liquidity Scheme, for a year from September 2008. It also has to pay the Bank £7.76m for its lost fees – small change for a big bank, but embarrassing nonetheless.

‘Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved,’ Carney wrote in an unusually strongly-worded letter to Lloyds chairman Lord Blackwell.

On top of that, the bank, which is still a quarter owned by the taxpayer, was whacked with a £148m fine from the FCA and US regulators for the Libor scandal. That’s less than the £290m Barclays paid out in June 2012 and the £699m RBS was fined last year – a small comfort.

Lloyds (and its fellow large banks) would dearly love to put all these ‘legacy issues’ behind it and tried to make clear it was all in the past, stating, ‘The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the Group, been suspended or are subject to disciplinary proceedings.’ Both Blackwell and chief exec Antonio Horta-Osorio damned the rigging as ‘unacceptable’.

But the saga may not be over yet: Carney said the Bank ‘will consider whether further action should be taken’. And try as they might, banks can’t seem to stop skeletons falling out of their closets.

Meanwhile, think tank ResPublica thinks it has the answer: an oath, which director Philip Blond claimed would 'finally place bankers on the road to absolution'. Unless of course they have their fingers crossed behind their backs.

The badly-spelt and the ugly: What Libor-riggers said

July 28th 2006:
- Rabobank Yen Libor submitter: ‘morning skipper.....will be setting an obscenely high 1m again today...poss 38 just fyi.’
- Lloyds TSB Yen LIBOR submitter: ‘(K)...oh poor customers....hehehe!! manual input libors again today then!!!!’

January 7th 2008
- Lloyds TSB Yen Libor submitter: plse may i have a nice high 1m libby today..grovel grovel...(k). [. . .]
- Rabobank Yen Libor submitter: yes nice and toasty....what would you like me to set for 1m mate? i’ve gone 70 so far....or hogher?
- Lloyds: thats fine..thx lad xx

March 31st 2009
- Lloyds TSB £ Libor submitter: Oh mate, I have always got loads of loans going out at the end of the month so I always try and fix it higher, so. Trouble is mate they keep calling it fucking lower, I can’t work out why it is fucking going down all the time

May 11th 2009
- Former HBOS $ Libor submitter to trader who assisted Lloyds TSB $ Libor submitter: when we have big resets as to be honest we shoudl be co ordinating the libor inputs to suit the books. for example later this month i have a 5y 3 month liability reset so we shoudl put in a low one there ill let u know.

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