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July 20, 2012 at 05:15 AM
Barclays has been a cautionary lesson for other banks involved in the LIBOR-rigging scandal. Outrage over the bank’s involvement in manipulation of the interbank rate that claimed its top three officers in addition to exacting a heavy financial toll has led to other banks involved in the scheme to seek a group settlement rather than expose themselves individually to regulatory and public fury.
Reuters reported Friday that unidentified sources cited preliminary discussions with regulators by banks in an effort to avoid the spotlight cast on the first bank to come to terms with regulators. Those familiar with the banks’ reasoning said that while it is not yet known if regulators will allow such an arrangement, the banks want to avoid the backlash from politicians and from people in general that assailed Barclays for its role in the scandal.
A group settlement had been discussed before Barclays reached its agreement with regulators, and now such talks have been resumed in the wake of the furor. While many banks are involved in the investigation, it is not known which are engaged in group settlement talks.
One unidentified banker said in the report that a group settlement would appeal to regulators because of the headlines it would produce and the magnitude of the potential settlement figure. The report cited the $25 billion settlement reached by five U.S. banks and American regulators over the mortgage meltdown.
However, the banker conceded that the banks were having a hard time working together, with considerable bargaining and jockeying for position taking place that could complicate any possibility of a settlement.
Another source at one of the involved institutions said that further complications were the fact that different groups of regulators were involved with different banks, and that charges were different in each instance. Such difficulties lowered the odds of reaching a successful agreement, the source said.
