Swiss question 12 banks as LIBOR probe widens

Fri Feb 3, 2012 7:34am EST
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By Martin de Sa'Pinto and Caroline Copley

ZURICH (Reuters) - Switzerland is investigating 12 U.S., European and Japanese banks suspected of conspiring to manipulate interbank lending rates used to set interest rates on hundreds of trillions of dollars of securities.

The Swiss Competition Commission (COMCO) said on Friday it had received information of possible collusion between derivatives traders concerning London Interbank Offered Rate (LIBOR) and Tokyo Interbank Offered Rate (TIBOR).

"Derivative traders working for a number of financial institutions might have manipulated these submissions by coordinating their behavior, thereby influencing these reference rates in their favor," COMCO said in a statement.

Libor is derived from the rates that banks say they charge each other and is used worldwide as a benchmark for setting rates on about $350 trillion of derivatives and other financial products. Small changes in the rate can have large impacts on the amounts of interest that can be charged.

It is also the benchmark reference rate used by the Swiss National Bank in setting monetary policy.

COMCO said those under investigation are Bank of Tokyo-Mitsubishi UFJ, Citigroup, Credit Suisse, Deutsche Bank, HSBC Holdings, JP Morgan Chase & Co., Mizuho Financial Group Inc., Rabobank Groep N.V., Royal Bank of Scotland Plc Societe Generale, Sumitomo Mitsui Banking Corporation and UBS.

U.S., European Union and British regulators are also investigating whether banks understated interbank rates to reduce borrowing costs and downplay investor panic during the banking crisis.

"We are in contact with the U.S. Department of Justice and the EU Competition Commission," said Olivier Schaller, a COMCO official.   Continued...

<p>A UBS logo is pictured on a UBS bank building in front of the Swiss federal parliament building in Bern February 1, 2012 REUTERS/Pascal Lauener</p>