Barclays Scandal: Libor

Powerful Essays
Topics: Finance, Bank
From Amanda Chua, Financial Manager
To Sir David Walker, Chairman of Barclays Plc.
Date 24th February 2013
Subject Implication of The Recent Libor-Fixing Scandal for Barclays Bank

1. Executive Summary * The London Interbank Offered Rate (Libor) is the average interest rate charged to banks for lending funds in the interbank market (Investopedia n.d.). * The UK Treasury reported that Libor is responsible for an estimated $300 trillion worth of financial transaction (BBC 2012). * Barclays’ traders submitted inappropriate rates upon derivative traders request (FSA 2012). * Barclays’ submitted inappropriate rates to prevent negative media attention (FSA 2012). * Barclays was fined £290 million for Libor scandal (Wilson 2012). * Former Chairman, CEO and COO resigned in July 2012 (BBC (B) 2013). * Barclays’ share prices fluctuated due to Libor Scandal (Fletcher 2012). * Pursuing profit maximization, Barclays inevitably exploited its stakeholders (MBA Knowledge Base n.d.). * Financial managers think solely for the purpose of profit maximization for the shareholders as it lose focus, carrying out unethical behaviors to gain short-term gratification. * Barclays is suggested to create shareholder value by combining a well-thought-of goal with focused financial planning that will deliver returns to shareholders but in an ethical manner that is acceptable by the society (Barclays Boss Lays Out Revival Plans, 2013). * Installation of more advanced surveillance devices further enforces plan as employees are monitored closely in efforts to control the wellbeing of the workers (Roland 2013). * Barclays is suggested to form a neutral ring-fenced rate-setting unit to monitor the rates submission (Daniels 2013). 2. Libor: Explained
The London Interbank Offered Rate (Libor) is the average interest rate charged to banks for lending funds in the interbank market (Investopedia n.d.).
Major banks in London who are under BBA



Bibliography: ACTUELNEWSCHANNEL. 2013. Barclays Boss Lays Out Revival Plans [online]. [Accessed 22 February 2013]. Available from: http://www.youtube.com/watch?v=4dznoD8yd14 ARMOUR, J

You May Also Find These Documents Helpful

  • Good Essays

    individuals that benefitted from the manipulation of LIBOR. The Barclays derivatives traders, Money Market Desk, Bob Diamond and senior management and other banks all had some sort of gain from the LIBOR scandal.Let’s start with the people that had the most monetary gain - the Barclays derivative traders. It is said that LIBOR has been manipulated since the early 90s. Since then, there has been trillions of money made by derivate traders as they influence LIBOR. The traders communicated with the Money Market…

    • 2062 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Libor rate scandal

    • 610 Words
    • 3 Pages

    THE SCANDAL… “This dwarfs by orders of magnitude any financial scam in the history of markets “ -Andrew LO, Professor of Finance, MIT WHAT IS LIBOR ?  Libor is the benchmark interest rate that affects how consumers and companies borrow money across the world.  It the average interest rate calculated through the submission of interest rates by major banks in London.  It is controlled by British Bankers 'Association(BBA) WHAT IS AFFECTED BY THE RATE ? Derivatives •Libor underpins…

    • 610 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Barclay Bank Scandal

    • 425 Words
    • 2 Pages

    Barclay Bank Scandal LAW/531 September 16, 2012 Barclay Bank Scandal This week our team decided to reflect on the Barclay Bank Scandal. We discussed how this scandal has affected banks all over the world and how it is affecting the people, especially those who have mortgages, student loans, and credit cards. People will see their interest rates go up even hirer than they are now. Barclay has issued an apology and is now trying to put…

    • 425 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Libor

    • 1419 Words
    • 4 Pages

    Individual Assignment #2 Barclay and the LIBOR Scandal Introduction Issues pertaining to fraud, insider trading, discrimination, bribery, and compensation are just some of the ethical problems that disrupt the global financial system. Barclays, one of the largest banks and financial services institution in London, whose operations spans retail, wholesale, investment banking, wealth management, mortgage lending and credit cards, has recently been placed under the spotlight as allegations…

    • 1419 Words
    • 4 Pages
    Powerful Essays
  • Satisfactory Essays

    HOW THE LIBOR SCANDAL AFFECTED THE PEOPLE. The libor scandal affected a lot of people in the country but the question is did it break any law that was set? It may or may not have affected any supreme law. Some argue that the banks came together to decide the cost of borrowing that they would send to be calculated as the libor. Others also argue that the banks knew the times that the libor was to be released and hence send their rates just in time to alter the libor. This, they believe goes against…

    • 469 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Ethics, Greed, & Psychology within the Libor Scandal Ethical dilemmas within the business environment have always garnered considerable attention and reaction from all global stakeholders. Issues such as fraud, insider trading, discrimination, bribery, and compensation are only some of the ethical problems that have disrupted the global financial system. In response to these ethical issues, stakeholders have undertaken various protective measures; for example, businesses have progressed…

    • 2571 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    Bba Libor

    • 1981 Words
    • 8 Pages

    Breakdown: Libor Scandal LIBOR (London Inter-Bank Offered Rate) is a benchmark for short term interest rates estimated by averaging the lending rates charged by large banks in London to other banks in London. Financial markets use LIBOR as a benchmark rate for mortgages, student loans, derivatives contracts, and interest rates for credit cards. This benchmark also measures trust in the financial system and the faith that banks have in each other’s financial health. In June 2012 traders at Barclays were…

    • 1981 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    Libor

    • 1559 Words
    • 7 Pages

    LIBOR: LIBOR stands for the London Interbank Offered Rate published by the British Banker’s Association. LIBOR indicates the average rate that a participating institution can obtain unsecured funding for a given period of time in a given currency in the London money market. The rates are calculated based on the trimmed, arithmetic mean of the middle two quartiles of rate submissions from a panel of the largest, most active banks in each currency. In the case of the U.S. LIBOR, the panel consists…

    • 1559 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Ethics & Libor

    • 2268 Words
    • 10 Pages

    Marcella’s case Here the issue is Marcella has been asked by the manager, who is in charge of the contract, to provide a convenience as claiming his tour expense in the projects’ expenses. It is actually a position-related consumption, by abusing his power on the project, he tends to approve the Marcella’s invoice and misappropriate public funds for private consumption. The role Marcella plays here is to do a favor, pay the manager’s tour fee first and claim it into her contract reward. There is…

    • 2268 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    Ethics and Libor

    • 876 Words
    • 4 Pages

    by the consequences of ones actions instead of agent’s intentions. Therefore, judging from the Utilitarian perspective, one can argue that Libor rate manipulation did not benefit the society as whole, instead it benefited couple investment banks, and therefore it was not an ethical action. However, how about if those banks actually did not manipulate the Libor rate and went bankrupt during the 2008 crisis, will that benefit the society as a whole? Probably not. We have seen the Lehman Brothers going…

    • 876 Words
    • 4 Pages
    Good Essays