Bank rate rigging scandal widens; Diamond fights on
By Steve Slater and Huw Jones
LONDON (Reuters) - A scandal over the rigging of key interest rates could create a legal morass that may hamper the global banking industry for years, analysts said, as the head of Barclays (BARC.L: Quote) fought to hold onto his job.
With the Times newspaper naming RBS (RBS.L: Quote) as the next bank facing a fine for its alleged involvement in manipulating the key lending rate between banks, the head of the Bank of England said there needed to be "real change" in the industry's culture.
"That will require two things. One is leadership of an unusually high order and changes to the structure of the industry," Mervyn King told a news conference, adding he hoped that the UK parliament would legislate as soon as possible.
U.S. and British authorities fined Barclays $453 million on Wednesday for manipulating the London interbank offered rate (Libor), which underpins some $360 trillion of loans and financial contracts around the world - and analysts forecast more banks would soon be named for collusion.
"Reading the statements by the authorities we expect to get settlements by others in the course of time which could be more punitive," analysts at Credit Suisse said.
Others predicted Barclays and other banks could face billions in costs from litigation, especially in the United States, in much the same way that oil major BP (BP.L: Quote) ran into drawn-out legal rows over its oil spill.
"Given the long-tailed nature of investigations we expect this to be a long-term overhang," said Morgan Stanley analyst Chris Manners.
The Times said RBS faced a likely fine of 150 million pounds ($233 million) for participating in market manipulation offences similar to those engaged in by Barclays. Continued...