BANKS will today find out just how rigorous the investigation into the Libor scandal will be, as the Treasury is this morning set to announce the terms of Martin Wheatley’s review into the key interbank interest rate.
Traders at banks including Barclays were found to have falsely entered low or high interest rates to the British Bankers’ Association, dealing a further blow to the industry’s already battered image.
Wheatley is expected to look at how the rate is set and whether Libor submissions should be based on actual transactions, as well as the governance of the process and whether Libor-setting can become a regulated activity. He will also look at what punishments should be handed out to those who enter false readings.
He is expected to take evidence over a four week period and make his recommendations in September, as the chancellor wants a swift review. “We need to get on with this – not spend years on navel gazing when we know what has gone wrong,” George Osborne told MPs earlier this month.
The European Commission is also including Libor manipulation in its Market Abuse Directive, which seeks to outlaw the practice across the whole EU.
But this is not the only scandal engulfing the sector. Barclays announced on Friday that the FSA is investigating whether or not the bank made sufficient disclosures about the fees it paid in raising capital from investors in Qatar and Abu Dhabi.
Meanwhile it emerged that former civil service boss Lord O’Donnell is out of the running to replace Marcus Agius as chairman of the bank.
Although reports had suggested the board favoured him for the role, it is thought that his lack of experience in the private sector and the banking industry has ruled him out of the race.