After losing tens of millions of pounds on last year's copper and aluminum trades (base metal trading losses allegedly amounting to $500 million according to some London Metal Exchange market participants), Barclays bank, one of UK's and the world's top banks, is feeling the heat yet again. It has recently been slapped a £290 million ($452 million) fine over Libor manipulation by UK's Financial Services Authority and US Commodity Futures Trading Commission after a long-running probe.
LIBOR or London Interbank Offered Rate, is the benchmark interbank rate used to set the borrowing cost of consumer and business loans, mortgages and derivatives which are worth around £288 trillion ($450 trillion). Barclays, one of the world's top three dealers in the fixed income market, has been accused of artificially manipulating this rate for several years in collusion with other banks.
Not wasting any time, the UK parliament's Treasury Select Committee (TSC) set up a probe and grilled Barclays CEO Bob Diamond on Wednesday. Diamond with other Barclays executives namely, Finance Director Chris Lucas, Chief Operating Officer Jerry del Missier and investment banking chief Rich Ricci all waived their bonuses for this year.
Meanwhile, Paul Tucker, the Bank of England (BOE) deputy governor, has offered to appear before the TSC. Tucker told the BOE on Wednesday that he will "clarify (his) position with regard to the events involving the Bank of England, including the telephone conversation with Bob Diamond on 29 October 2008." Tucker and former Barclays bank Chairman Marcus Agius are scheduled to appear before the Members of Parliament of the TSC on July 9th.
In addition, the UK Serious Fraud Office (SFO) has prepared to launch a criminal investigation into the Libor fixing scandal. SFO is getting a boost in its budget from the government, lending it enough firepower to conduct a full inquiry on the matter.