Rigging scandal still pursues Swiss banks
Switzerland’s two biggest banks, UBS and Credit Suisse are among 16 banks worldwide being sued in a civil lawsuit by the United States Federal Deposit Insurance Corporation (FDIC) over alleged manipulation of the key Libor global interest rate.
The FDIC says the manipulation, which occurred between August 2007 and “at least” the middle of 2011, benefited the big financial institutions at the expense of 38 small and medium-sized US banks, ten of which subsequently failed and were taken over by the FDIC.
In its suit filed on Friday it is seeking economic and punitive damages.
The Libor – the London interbank offered rate – affects trillions of dollars of contracts around the world, including loans to individuals and businesses. It is set every morning by a British banking trade group on the basis of estimates submitted by the 16 international banks of what it costs them to borrow. The FDIC maintains that the estimates they submitted were false, making the rate artificially low.
The other banks on the list are JPMorgan, Citigroup and Bank of America of the United States, the British banks HSBC, Royal Bank of Scotland, Lloyds and Barclays, the Société Générale of France, the German Deutsche Bank and Portigon, the Dutch Rabobank, the Royal Bank of Canada and Japan’s Norinchukin Bank and Bank of Tokyo-Mitsubishi.
Four of the banks, including UBS, have already paid fines totalling about $3.6 billion (CHF3.15 billion) to settle charges of rigging the Libor brought by the US and European regulators. They signed agreements with the US justice department which enabled them to avoid criminal prosecution if they met certain conditions.
However, they face more civil suits brought by a number of US cities as well as the US mortgage lenders Frannie Mae and Freddie Mac.
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