LONDON: Lloyds Banking Group has received subpoenas from government agencies investigating interest rate rigging, dragging the biggest mortgage lender in Britain deeper into a scandal that has rocked the industry and thrown rival Barclays into turmoil.
Barclays has seen its chairman and chief executive resign, and its share price plunge, since it was fined a record $453 million by U.S. and British authorities for manipulating Libor interest rates.
More than a dozen other banks are also being investigated and more fines are expected. Lloyds, 40 per cent owned by the government after a bailout during the 2008 financial crisis, had said previously it was cooperating with investigators and it was a defendant in several Libor-related lawsuits.
The bank, which has more than 30mn customers and is a sponsor of the London Olympic Games, said yesterday parts of its business had received subpoenas, compelling them to provide information.
Analysts at Liberum Capital have suggested Lloyds could have to pay out up to 1.5 billion pounds ($2.3bn) to settle Libor-related claims. Finance Director George Culmer said any such figures were speculation and the bank was not putting aside any funds to cover potential payouts. "We are still part of an ongoing investigation and until the regulator is satisfied that investigation is complete there is no point in thinking about or putting down a number," he said.
Chief Executive Antonio Horta-Osorio said Lloyds had conducted a thorough internal probe into its Libor practices and no one had been sacked as a result. Lloyds said earlier this year it had suspended two derivative traders. Horta-Osorio said the bank could not publish its findings until investigations by regulators were completed but he expects the situation to become "clearer" in the next six months. Lloyds also said it had set aside another 700mn pounds to compensate customers mis-sold insurance products - another scandal that has undermined trust in British banks.
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