Barclays will pay $450 million to U.S. and British regulators to settle allegations that it rigged the interbank lending rate known as Libor, marking the first resolution in a sweeping investigation of the world’s largest banks.
Libor, the London interbank offered rate, is a standard interest rate for loans between banks that serves as a benchmark for more than $360 trillion in lending to businesses and consumers.
The British bank admits to scheming to manipulate rates to increase profits and hide the reality of its distress during the financial crisis. Regulators suspect Barclays did not act alone, but was part of a larger conspiracy to set artificially low rates for Libor and the Euro interbank offered rate, or Euribor.
The U.S. Commodities Future Trading Commission uncovered evidence of Barclays senior management and numerous traders in London, New York and Tokyo making false reports to improve the bank’s trading position dating to 2005, according to the complaint filed Wednesday. At the height of the recession, the bank submitted low figures to keep rates down and to deflect public scrutiny about its condition.