Barclays libor fiddling

Grumblegrunt

LE
Book Reviewer
#1
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.
 

Auld-Yin

ADC
Kit Reviewer
Book Reviewer
Reviews Editor
#4
Who gets the £290 mill then?
Barclays will, 'cos the government will take the £290M then give it back to Barclays as free loans under the Quantative Easing guise!!!
 
#5
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?
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
 
#7
..and if you have a mortgage you benefited!
 

Wordsmith

LE
Book Reviewer
#8
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.

Wordsmith
 
B

bokkatankie

Guest
#9
..and if you have a mortgage you benefited!
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
Otherwise what would the point of manipulating be?
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.
 
#11
Three guesses.


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.

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
 
B

bokkatankie

Guest
#12
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!
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?
 

Grumblegrunt

LE
Book Reviewer
#13
well I think a 10 billion fine should cover it - just over years bonus pot
 
#14
So really I do not think you know what you are talking about.
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).
 
B

bokkatankie

Guest
#15
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).
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.
 
B

bokkatankie

Guest
#17
You are atypical (in a sample of UK residents).
Many UK residents have mortgages on foreign property linked to 3 month LIBOR, many ex-pats have all manner of products liked to Sterling LIBOR. Many UK residents have all mannner of products linked to Sterling LIBOR; they just do not know it. Your assumption that no UK resident is possibly affected by this manipulation is, frankly, incorrect. And by your own calculation if it affected only a few million then the bank has made an awful lot of money.

But Barclays is not a UK bank it is a Global bank, remember they got the big seat in NY when they got the bargain basement fire sale.

And, so by your reckoning, it is OK if they ripping off the rest of the world so long UK is OK?

As to the reasoning for doing it, neither the regulators or I can agree with you that it was lawful.
 
B

bokkatankie

Guest
#18
As an interesting but linked aside, there is a class action ongoing in SA against BOE (Board of Executors), now part of Nedbank, by foreign investors who had loans linked to ZAR LIBOR, now as any fule know, there is no such thing but BOE are claiming that they also did not know this (they are the oldest trust company in the world). Having done a forensic investigation of the rate against Sterling LIBOR and JIBAR it would appear that the rate was manipulated in BOE's favour, allegedly!

Now under case study is that a loan linked to a fictitious interest rate has no validity and any interest paid was unlawful.

It will be interesting to see if someone picks up on the similarity to the manipulated Barclays LIBOR.
 
#19
But Barclays is not a UK bank it is a Global bank, remember they got the big seat in NY when they got the bargain basement fire sale.

And, so by your reckoning, it is OK if they ripping off the rest of the world so long UK is OK?

As to the reasoning for doing it, neither the regulators or I can agree with you that it was lawful.
I must admit I am totally lost by these comments. I have never said what they did was lawful or hinted at it.

All I did early was answer the first question about PPI, a UK specific question with a UK specific example. I stated the impact on a the typical (UK) resident would be tiny, if at all. I then later inferred non-UK would be affected (JIBAR, EURIBOR).
 
B

bokkatankie

Guest
#20
I must admit I am totally lost by these comments. I have never said what they did was lawful or hinted at it.

All I did early was answer the first question about PPI, a UK specific question with a UK specific example. I stated the impact on a the typical (UK) resident would be tiny, if at all. I then later inferred non-UK would be affected (JIBAR, EURIBOR).
Apart from you saying that JP Morgan were hailed as heros in 1906 for doing something similar, I cannot disagree.

The regulators do not agree with your assesment of the impact hence the rather large fine.

And, sorry to bang on, let us not look at this in isolation of other activities at Barclays. Most UK commercial loans are now linked to LIBOR, Barclays have been the front runner in selling interest rate swaps as insurance against fluctuations in interest rates. They even went so far as to tell clients not to discuss the product with anyone, not even the regulators (they got another fine for that). So a marginal change in LIBOR that suited Barclays could have had a dramatic effect on the underlying derivative that formed the swaps thus causing a pricing advantage or the increase in cost of said insurance.

This investigation is still going on but I think we will find that the 2 are linked.
 
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