A EUROPEAN asset manager yesterday sued twelve US, European and Japanese banks, accusing them of conspiring to manipulate Libor, a benchmark used to set interest rates on hundreds of trillions of dollars of securities.
Vienna-based FTC Capital and two funds it operates in Luxembourg and Gibraltar accused the banks of conspiring to artificially depress Libor, and limit trade in Libor-based derivatives from 2006 to 2009.
The defendant banks include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds Banking Group, Norinchukin Bank, Royal Bank of Scotland, UBS and WestLB.
Libor – the London Interbank Offered Rate – is a measure for rates that banks charge each other, and is used worldwide as a short-term rate benchmark. About $350 trillion (£214.59 trillion) of derivatives and other financial products are based on Libor. Small changes in the rate can have large impacts on interest charged.
FTC said the 12 banks colluded to suppress Libor to make them appear healthier than they were, and take advantage of trading opportunities not available to outside investors.
FTC filed its complaint in the federal court in New York.
City A.M. Reporter