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A secret recording that implicates the Financial institution of England in Libor rigging has been uncovered by BBC Panorama.

The 2008 recording provides to proof the central financial institution repeatedly pressured industrial banks throughout the monetary disaster to push their Libor charges down.

Libor is the speed that banks lend to one another and it units a benchmark for mortgages and loans for strange clients.

The Financial institution of England mentioned Libor was not regulated within the UK on the time.

Banks setting artificially low Libor charges is named lowballing.

The recording calls into query proof given in 2012 to the Treasury choose committee by former Barclays boss Bob Diamond and Paul Tucker, the person who went on to change into the deputy governor of the Financial institution of England.

‘Critical stress’

Libor, the London Interbank Supplied Charge, tracks how a lot it prices banks to borrow cash from one another. As such it’s a massive affect on the price of mortgages and different loans.

Within the recording, a senior Barclays supervisor, Mark Dearlove, instructs Libor submitter Peter Johnson, to decrease his Libor charges.

He tells him: “The underside line is you are going to completely hate this… however we have had some very severe stress from the UK authorities and the Financial institution of England about pushing our Libors decrease.”

Mr Johnson objects, saying that this is able to imply breaking the foundations for setting Libor, which required him to place in charges based mostly solely on the price of borrowing money.

Mr Johnson says: “So I am going to push them under a sensible stage of the place I believe I can get cash?”

His boss Mr Dearlove replies: “The very fact of the matter is we have got the Financial institution of England, all kinds of individuals concerned in the entire thing… I’m as reluctant as you’re… these guys have simply rotated and mentioned simply do it.”

Mr Dearlove declined to reply questions from BBC Panorama.

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4 former Barclays merchants have been jailed final 12 months for Libor rigging

Till just lately a member of employees at every of the most important banks, the Libor submitter, would say what rate of interest they thought the financial institution must pay to borrow cash. A mean can be taken to reach at Libor.

Banks have been fined greater than £6bn for permitting submitters to be influenced by requests from merchants or bosses to keep in mind the financial institution’s industrial pursuits, comparable to buying and selling positions.

The cellphone name between Mr Dearlove and Mr Johnson came about on 29 October 2008, the identical day that Mr Tucker, who was at the moment an govt director of the Financial institution of England, phoned Barclays boss Mr Diamond. Barclays’ Libor charge was mentioned.

Mr Diamond and Mr Tucker have been referred to as to offer proof earlier than the Treasury choose committee in 2012. Each mentioned that they’d solely just lately change into conscious of lowballing.

Panorama performed the October 2008 recording to Chris Philp MP, who sits on the Treasury committee.

He advised the programme: “It sounds to me like these folks giving proof, notably Bob Diamond and Paul Tucker have been deceptive parliament, that could be a contempt of parliament, it is a very severe matter and I believe we have to urgently summon these people again earlier than parliament to clarify why it’s they seem to have misled MPs. It is extraordinarily severe.”

Mr Diamond advised the BBC: “I by no means misled parliament and… I stand by all the things I’ve mentioned beforehand.” Mr Tucker didn’t reply to our questions.

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Former Barclays chief govt Bob Diamond stands by his testimony to MPs

Peter Johnson, the Barclays Libor submitter, was jailed final summer time after pleading responsible to accepting dealer requests to control Libor.

Two merchants who made requests for Mr Johnson to maneuver Libors up or down, Jay Service provider and Alex Pabon, have been discovered responsible final June of conspiracy to defraud together with one other submitter, Jonathan Mathew.

Nevertheless, the jury couldn’t attain a verdict on two different merchants then on trial, Ryan Reich and Stelios Contogoulas. The Critical Fraud Workplace requested a retrial which concluded final week. Each Mr Reich and Mr Contogoulas have been unanimously acquitted.

Panorama additionally performed Mr Contogoulas the October 2008 recording. He mentioned he believed that if it had been performed throughout the prison trials it might need affected the outcomes.

He mentioned: “That is the factor, you already know in these trials that we went by means of they separated all the things, separated buying and selling requests and lowballing. So something that has to do with this they do not go in. So that you’re asking me do I believe that if all this was in would it not make a distinction? Most likely, is the reply.”

Lowballing

The Critical Fraud Workplace which introduced the Barclays prosecutions advised Panorama that proof of lowballing was supplied to the defence.

Additionally they say they’re nonetheless investigating lowballing and that they comply with the proof “as excessive because it goes and goal to cost essentially the most senior folks wherever there’s a practical prospect of conviction”.

The Financial institution of England mentioned: “Libor and different world benchmarks weren’t regulated within the UK or elsewhere throughout the interval in query.

“Nonetheless, the Financial institution of England has been helping the SFO’s prison investigations into Libor manipulation by staff at industrial banks and brokers by offering, on a voluntary foundation, paperwork and information requested by the SFO.”

Panorama: The Big Bank Fix can be broadcast on BBC One on Monday 10 April at 20.30.