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Lloyds fined £218m for Libor manipulation

29 July 2014

Lloyds has been fined a total of £218 million for Libor manipulation.

The UK regulator the Financial Conduct Authority (FCA) has fined Lloyds bank and Bank of Scotland, both part of Lloyds Banking Group, £105 million for serious misconduct relating to the Special Liquidity Scheme (SLS), the Repo Rate benchmark and Libor.

£70 million of the fine relates to attempts to manipulate the fees payable to the Bank of England for the firms’ participation in the SLS, a taxpayer-backed government scheme designed to support the UK’s banks during the financial crisis.

According to the FCA, while the Libor-related misconduct is similar in many ways to that of other financial institutions, the manipulation of the Repo Rate benchmark in order to reduce the firms’ SLS fees is misconduct of a type that has not been seen in previous Libor cases.

Tracey McDermott, the FCA’s director of enforcement and financial crime, said: ‘The firms were a significant beneficiary of financial assistance from the Bank of England through the SLS. Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable. This falls well short of the standards the FCA and the market is entitled to expect from regulated firms.’

The US Commodities Futures Trading Commission (CFTC) also bought charges against Lloyds Banking Group and Lloyds Bank for acts of false reporting and attempted manipulation of Libor for Sterling, U.S. Dollar, and Yen committed by employees of Lloyds TSB and HBOS. These charges were settled with a fine of $105 million (£62 million).

The CFTC found that in a few instances, Lloyds TSB was successful in its manipulation of Sterling Libor and Yen Libor. The CFTC also brought and settled charges that Lloyds TSB, at times, aided and abetted the attempts of derivatives traders at Rabobank to manipulate Yen Libor.

In addition, the US Department of Justice entered into a deferred prosecution agreement with Lloyds Banking Group, deferring criminal wire fraud charges in exchange for continued cooperation and agreement to an $86 million (£51 million) penalty.

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