More banks involved in rate rigging scandal as calls grow for Barclays Chief to resign

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By Martin Kelly

Barclay’s Chief Executive Bob Diamond is facing increasing calls to step down as head of the under fire bank as reports suggest the rate-rigging scandal may not be restricted to just Barclays.

A furious outcry has met the news that Barclays’ traders deliberately sought to manipulate the interest rates imposed on lenders.

Barclays was fined £290m after it was found to have manipulated interest rates at which banks lend to each other.  Regulators in Europe, the US and Asia have said that investigations into other banks are “ongoing”.

Tracey McDermott, director of enforcement at the FSA, said: “We have a number of investigations that are ongoing.

“Obviously we need to look at each case on its own particular facts but the initial indications are that Barclays was not the only firm that was involved in this.”

The scandal revolves around Barclay’s attempts at rigging two key global interest rates, the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

These rates affect the trillions of dollars of payments financial institutions pay one another and can have a direct effect on mortgage payments.

Speaking on the BBC’s Newsnight programme, former Financial Services Secretary Lord Myners said the behaviour of Barclays staff was the worst he had seen and some should face the prospect of going to prison.

“This is the most corrosive failure of moral behaviour I have seen in a major UK financial institution in my career,” he said.

“I think fines and public criticism will not stop these behaviours. These behaviours will not stop until the people perpetrating it or responsible for overseeing them face the prospect of criminal charges and the prospect of going to jail.”

The Libor and Euribor rates are published daily, the rates are based on an average of the rates each bank submits.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates did so after being lobbied by Barclays’ derivatives traders.  The manipulated figures benefited their trading positions, and produced a profit for the bank.

The FSA has revealed that Barclays traders were quite open about their routine attempts to lobby their colleagues and the practice appeared to have been an accepted part of the banks culture.