By Simon Miller

Barclays Bank has been given the largest fine ever imposed by the Financial Services Authority (FSA) for misconduct relating to the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

The FSA fined Barclays £59.5m for breaches of requirements over a number of years and involved a "significant number of employees".

Barclays was found to have made submissions to the Libor and Euribor setting process which took into account requests from the bank's interest rate derivatives traders who sought to benefit Barclays' trading positions.

The bank was also found to have sought to influence the Euribor submissions of other banks contributing to the rate setting process and reduced its Libor sibmissions during the financial crisis as a result of senior management's concerns over negative media comment.

In addition, Barclays failed to have adequate systems and controls in place relating to its Libor and Euribor submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.

Barclays also failed to deal with issues relating to its Libor submissions when these were escalated to Barclays’ Investment Banking compliance function in 2007 and 2008. 

Tracey McDermott, acting director of enforcement and financial crime, said: “Barclays’ misconduct was serious, widespread and extended over a number of years.  The integrity of benchmark reference rates such as Libor and Euribor is of fundamental importance to both UK and international financial markets.  Firms making submissions must not use those submissions as tools to promote their own interests.

“Making submissions to try to benefit trading positions is wholly unacceptable.  This was possible because Barclays failed to ensure it had proper controls in place.  Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.”

Barclays co-operated fully during the FSA’s investigation and agreed to settle at an early stage and qualified for a 30% discount under the regulator's settlement discount scheme.  Without the discount the fine would have been £85m.

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