Barclays libor fiddling

Discussion in 'Economics' started by Grumblegrunt, Jun 27, 2012.

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  1. Grumblegrunt

    Grumblegrunt LE Book Reviewer

    so after they have been fined and its proven the affected the international rates do you reckon we will get chance to make a claim in the same way we can after the payment protection scams?
  2. Three guesses.

    What gets me is the breathtaking lack of concern for consequences displayed in the email exchanges. I've long since given up expecting anything like integrity from the financial services industry, but surely self-preservation should kick in at some point?

    The industry clearly isn't capable of regulating itself even if it had the slightest interest. I doubt that with so many directorships on offer there'll be much resolve in Parliament to take up the slack so it looks like we'll just have to get used to being podgered senseless.
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  3. Who gets the £290 mill then?
  4. Auld-Yin

    Auld-Yin LE Reviewer Book Reviewer Reviews Editor

    Barclays will, 'cos the government will take the £290M then give it back to Barclays as free loans under the Quantative Easing guise!!!
  5. No. I can guarantee you have no financial products in your name linked to LIBOR.

    Indirectly your pension pot may have been affected by 0.01-0.02% of notional for a few months (if it's a private pension). Even then it would be a tiny part of your pension. We are talking pence here that you would be 'wronged' by.
  6. OK let's do the maths.

    Person A in private sector has a 100,000 pension pot.

    Barclays submits it's 3m LIBOR rate 0.02% below what it should be for a period of 6-months. Assuming Barclays is the only bank doing it in the GBP LIBOR panel then the actual LIBOR rate will be affected by 0.1bp or 0.001%. (Top and bottom banks removed in the GBP LIBOR panel leaving a total of e.g. 14).

    So let's say your 100K pension is split 40K Bonds, 40K Equities and 20K property.

    Of your 40K bonds most will be fixed rate (unaffected), but 10% may be FRNs (affected).

    So you have 4K of FRNs affected by 0.001% over 6 months.

    That is.... 2 PENCE

    If you're with a public sector scheme... 0 PENCE
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  7. ..and if you have a mortgage you benefited!
  8. Wordsmith

    Wordsmith LE Book Reviewer

    Its going to be very expensive for the banks though. After Barclay's admission of liability, the class action lawyers are lining up in the US.

    And this was not the world's most sophisticated fiddle. It should be possible to go to the banks own systems and look at their actual LIBOR rates versus what they reported. From there, the counter-parties should be able to prove what it cost them and put in a claim for that amount, plus damages. Bank profits could be going south.

    I also wonder if anyone's going to get jail time. It shouldn't be rocket science to prove fraud on the part of certain individuals.

  9. Well that allright then, why don't they just do it all the time, its not like it is illegal or anything.

    And yes in the big world beyond your world plenty of people have a whole range of products linked to LIBOR.

    Otherwise what would the point of manipulating be?
  10. In this case, maintaining confidence in that particular bank, keeping borrowing costs down. It's funny in 1906 when JP Morgan et al did this they were hailed as heros.

    When were you last engaged in an IRS, CLN, TRS or the such? As I said earlier, you are indirectly linked to it: you borrow, you better! You deposit, you worse!

    EDIT: I'm not defending Barclays, I'm fighting ignorance on this one. No one here has been directly affected or materially affected indirectly.
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  11. As my MP is finding out at the moment, I won't go into details but have provided suffiicient evidence to prove that none of the bodies were doing their job. Waiting for a response for Bo E
  12. How would I know if I was better or worse, how would I know if the rate was manipulated up or down, and perhaps more importantly why! And many people around the world have instruments linked to LIBOR such as loans but also deposits, so really I do not think you know what you are talking about.

    The link betweeen LIBOR and financial products is stated on the term sheet!

    Or do you believe the Barclays was doing us all a favour by manipulating the rate?
  13. Grumblegrunt

    Grumblegrunt LE Book Reviewer

    well I think a 10 billion fine should cover it - just over years bonus pot
  14. Please try me. FYI, I am entrusted to 'play' with $400,000,000 every day.

    You might have a lot of JIBAR retail products in South Africa in a similar fashion to the Spanish etc. with EURIBOR however in the UK that is not the case.

    No bank is going to fudge up their rate, that's against the whole reason for the manipulation in the first place (logically, and reported).
  15. Sad thing is, is that whilst you put exclamation marks around it, the world of banking appears to think it can play with anything. J P Morgan is not an ideal role model at the moment.

    And as to you last bit I have LIBOR, Sterling linked deposits and LIBOR Sterling linked loans. The rate is funnily enough based on Barclays idea of LIBOR 3 month. I am sure that they have my best interests at heart and would never, ever, do anything that might give me a lesser return or a higher margin.