Barclay’s shares plummet as criminalization of Libor fixing looms

Bob Diamond, Chief Executive of Barclays PLC (Reuters/David Moir)
UK has discussed potential criminal charges against Barclay’s Bank for manipulating the Libor rate. Britain’s major has been fined $450 million, and saw its shares plummet by 8% in late morning trading.

­UK’s Treasury and financial market regulator have discussed potential criminal charges against Barclays Bank for manipulating the rate.

"The issue is something that has been under discussion – the liabilities and criminal aspects," the Prime Minister’s spokeswoman told reporters. British Prime Minister David Cameron has said the bank’s management will have to answer some “serious questions.”
Earlier the Labour leader Ed Miliband called for a criminal investigation into the manipulation of the interest rates.

On Wednesday, US and British regulators imposed fines on Barclay’s for providing false figures on borrowing rates between 2005 and 2009, which affected hundreds of trillions of dollars of transactions, including bank-to-bank loans. The regulators said Barclays tried to fix the rates as it was worried about its public image during the 2008 financial crisis. Barclays will pay $453 million to US and British authorities to settle the allegations.

The allegation of rigging markets is regarded as a severe blow to Barclay’s reputation, and has resulted in calls for the management team including Barclays CEO Bob Diamond to quit.

Diamond as well as three other top bank executives has already agreed to give up bonuses this year, citing their “collective responsibility as leaders.” Diamond received a £2.7 million bonus last year despite voiced outrage over high payments despite weak financial results of the bank.

Meanwhile, investors rushed to sell Barclays shares amid worries on changes in Barclay’s management board and possible exposure to the inquiry into the banking sector. Barclay’s Bank saw its shares plummeted by 8% in late morning trading. Barclay’s stocks fall in London weighed down shares of other banks such as Lloyds Banking Group and Royal Bank of Scotland as investors become concerned.