Bank e-mails reveal allegations of manipulation of Norway rates

Norway’s financial regulator and central bank have received e-mails since 2010 from bankers outside the country alleging that interbank lending rates were being rigged.

The complaints came from “foreign banks,” raising concerns about the manipulation of the Norwegian interbank offered rate, or Nibor, the central bank said in an August letter to the Financial Supervisory Authority obtained by Bloomberg today.

“As a market participant and as one of the largest issuers of Norwegian denominated debt I am writing to complain about the Norwegian fixings,” a banker, whose name was blacked out, wrote in a June 2010 e-mail that was released by the central bank. “They seem to bear no resemblance to market realities and we suspect fixings that resemble market abuse.”

The central bank in December announced it was investigating the setting of the rate, which is used as benchmark for mortgage rates, corporate bond yields and derivative contracts. Nibor is calculated as an average of rates published by a panel of banks for various maturities, excluding low and high quotes, according to the Finance Norway, which represents banks in the country.

The panel is made up of DNB ASA, Danske Bank A/S, Svenska Handelsbanken AB, Nordea Bank Norge ASA, SEB AB and Swedbank AB. Since there are very few loans given between banks that extend beyond a few days, longer maturity Nibor rates are based on U.S. dollar rates and on the term premium for the dollar and krone, according to the central bank.

More Volatile

The currency aspect has made Nibor more volatile, the central bank said.

“We don’t recognize ourselves in the accusations directed at determining Nibor,” Oslo-based Danske Bank spokesman Stian Arnesen said in an e-mailed reply to questions. “We have good internal procedures for determining our contribution and we do trust the routines for Nibor fixing determined by Finance Norway.”

Nordea spokesman Thomas Sevang said the bank “welcomes that this is being investigated,” by phone today. “We have no reason” to believe “that anything is wrong and we follow that procedure,” he said.

Handelsbanken has “no information that suggests any wrong-doing,” spokesman Lars N. Saethre said by phone. “We regard this as unlikely.”

In a June 2010 e-mail, a banker said Nibor moves have “failed to reflect the prevailing market conditions” and since they have trades that are affected by the rate, they “wouldn’t wish to feel that we are at the whim of the local panel banks.”

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