Bank e-mails reveal allegations of manipulation of Norway rates

‘Big Player’

An e-mail from a “big market player” in March last year said moves in Nibor showed it was clear the panel kept rates up until a “position” rolled off. “If this isn’t market manipulation I don’t know what is,” the author of the e-mail wrote.

An e-mail from “a large international bank” to Finance Norway, which was forwarded to the central bank, recommended authorities look into “what off balance sheet deals they had fixing.”

Dagens Naeringsliv reported today that one of the complaints was sent by a banker at Royal Bank of Canada. The central bank declined to say who sent the e-mails. RBC spokeswoman Louisa Fairman also declined to comment.

FSA Monitoring

Jan Digranes, head of the banking and capital markets department at Finance Norway said “We have no reason to believe that there has been any manipulation of the interest rate,” by phone today. The group represents about 200 financial institutions operating in Norway.

The Finance Ministry in December asked the FSA and Norges Bank, as the central bank is called, to assess whether Nibor accurately reflects the rates on unsecured loans between banks and whether fixing is sufficiently robust. The ministry also backed calls from the financial regulator for improved supervision of the rate. The FSA will monitor individual banks in cases where there is reason to suspect manipulation, it said.

Interbank rates have come under international scrutiny after Barclays Plc was fined a record 290 million pounds ($468 million) in June for attempting to rig the London interbank offered rate and the European Interbank rate. At least 12 banks including Deutsche Bank AG are being investigated for manipulating Libor.

In Scandinavia, Denmark has conducted a probe of the Copenhagen interbank offered rate amid speculation it was manipulated during the financial crisis, while Sweden has also reviewed its equivalent rate, called Stibor.

Norway’s central bank has repeatedly pointed to weaknesses in Nibor. Former central bank Governor Svein Gjedrem in 2010 exposed shortcomings in the way Nibor is set, saying the bank will take steps to improve the structure. Gjedrem became secretary general at the Norwegian Finance Ministry in 2011 after completing two terms as central bank governor.

Bloomberg News

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