Lloyds 'Risks Criminal Action' In Rigging Case
The Bank of England (BoE) governor has warned Lloyds Banking Group that "clearly unlawful" conduct over fee manipulation may amount to criminal behaviour as it was fined more than £200m.
Some £70m of the penalty related to efforts by Lloyds to rig fees payable to the BoE under a taxpayer-backed government programme aimed at supporting banks during the financial crisis.
In a letter dated July 15, Mark Carney told Lloyds chairman Lord Blackwell that attempts to reduce payments under†this special liquidity scheme (SLS) were "reprehensible".
Lloyds was fined a total of†£218m by UK and US regulators over manipulation of the critical global interest rate†Libor benchmark and the repo rate - used to calculate fees due to the BoE for its support.
It has also paid a £7.76m compensation figure to the BoE over the now-defunct SLS.
The UK regulator, the Financial Conduct Authority (FCA), fined Lloyds £105m, while the US Commodity Futures Trading Commission (CFTC) fined Lloyds £62m and the US Department of Justice penalty was £51m.
Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said the bank's previously lax operating culture was to blame.
It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."
The CFTC said the "unlawful conduct of Lloyds" undermined the integrity of Libor, which is the basis of trillions of dollars of financial instruments.
The FCA said the SLS manipulation happened between April 2008 and September 2009.
The regulator said more than a dozen individuals at Lloyds, including seven managers, were directly involved in or were aware of, the Libor manipulation.
Lloyds would have been hit by a 30% larger FCA fine if it did not settle at an early stage.
More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £290m by Barclays and £390m by RBS.
FCA director of enforcement and financial crime Tracey McDermott said: "Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable."
On Friday, Sky News City Editor Mark Kleinman revealed the 25% taxpayer-owned group would seek to clawback bonuses paid to at least 15 former employees implicated in the inter-bank rate scandal.
The BoE said the latest case demonstrated the need for the Fair and Effective Markets Review, launched last month, which aims to restore public confidence in financial markets.