UK probing more banks for interest rate fixing

An international probe into alleged interest rate fixing that led to $453 million in fines against Barclays Bank is taking aim at four other big banks, British officials said.

Royal Bank of Scotland Group saw 1.3-billion pounds (US$2.1-billion) wiped off its value on Tuesday following a report that it could face criminal charges as part of an impending settlement over its role in a global interest rate rigging scandal. The Wall Street Journal reported that U.S. authorities were pushing RBS to accept criminal charges as part of a settlement which will see it fined up to 500-million pounds for the attempted manipulation of the London interbank lending rate (Libor) and other benchmark interest rates.

By Simon Johnson In the aftermath of the Barclays rate-fixing scandal, the most surprising reaction has been from people in the financial sector who fully understand the awfulness of what has happened. Rather than seeing this as an issue of law and order, some well-informed people have been drawn toward arguments that excuse or justify the behavior of the Barclays employees. This is a big mistake, in terms of both the economics at stake and the likely political impact.

Barclays CEO, Bob Diamond, announced Tuesday that he was stepping down, making him the latest victim of an interest rate-fixing scandal that has already seen the British bank charged with $453 million (360 million euros) in fines.

UBS AG, Switzerland’s biggest bank, may be fined more than US$1-billion by U.S. and U.K. regulators for trying to rig global interest rates, more than double the amount levied against Barclays Plc, according to a person familiar with the probe.