July 17 (Bloomberg) -- Banks that manipulated Libor and other interbank lending rates shouldn’t use the financial crisis as an excuse for collusion, the European Union’s antitrust chief said.
“A crisis is not at all an excuse” for failing to comply with antitrust legislation, EU Competition Commissioner Joaquin Almunia said yesterday in an interview in Brussels.
Barclays Plc admitted last month that it submitted false rates to help lower the London interbank offered rate, or Libor, during the 2007 financial crisis. Jerry Del Missier, the bank’s former chief operating officer, told U.K. lawmakers yesterday that he passed along instructions from then Chief Executive Officer Robert Diamond about the rate because he believed the Bank of England was concerned about its lending costs in 2008.
Diamond, who resigned as London-based Barclays’s chief executive officer after the bank was fined 290 million pounds ($453 million), told British lawmakers this month that other banks lowballed Libor submissions. Barclays also admitted to trying to alter the rates from 2005 to 2009 at the request of derivatives traders.
EU regulators are investigating banks over manipulation of the London, euro and Tokyo interbank lending rates for several currencies. The probes focus on suspected cartel arrangements for derivatives linked to the benchmark rates, including possible collusion over the setting of the rates.
Almunia said he’s strengthened the allocation of resources to EU investigators examining collusion over interest-rate derivatives to deal with the cases as quickly as possible.
Probes Take Time
“Cartel investigations take time,” Almunia said. “We need to be rigorous, even if I understand the need to reach decisions as soon as possible. We should analyze carefully all the documentation, all the information we collected, so I cannot anticipate a deadline” for an antitrust complaint.
Confidence in Libor, a benchmark for financial products valued at $500 trillion worldwide, has been dented by Barclays’s admission that it submitted false rates.
“If a benchmark that is used every day in thousands of millions of deals in the derivatives sector, but also to establish the interest rate on the mortgages for individual families, is manipulated, some people will win if they know in which sense the benchmark will be modified,” Almunia said.
The manipulation of such a benchmark creates mistrust in banks and banking groups, Almunia said.
“Knowing what has happened, everybody will agree that we need to change the way these benchmarks are established,” Almunia said. “We cannot rely on self-regulation.”
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