Lloyds pays $369m to settle claims it rigged key global interest rate

Agreement part of inquiry by US, UK regulators

LONDON — Lloyds Banking Group is paying $369 million to US and British authorities to settle allegations it manipulated a key global interest rate.

Lloyds, one of the world’s largest banks, on Monday became the sixth financial company sanctioned in the international rate-rigging scandal. Regulators said Lloyds attempted to manipulate and in some cases succeeded in manipulating the London interbank offered rate, known as Libor.

The rate, used by banks to borrow from each other, affects trillions of dollars in contracts around the world, including mortgages, bonds, and consumer loans.


Under an agreement with the US Justice Department, Lloyds will be allowed to avoid criminal prosecution in exchange for admitting responsibility for misconduct and continuing to cooperate in the investigation of major banks’ actions regarding Libor.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

The $369 million that Lloyds is paying includes about $178 million levied by the UK Financial Conduct Authority, an $86 million criminal penalty to the Justice Department, and a $105 million civil penalty to the US Commodity Futures Trading Commission.

The misconduct occurred between May 2006 and 2009, according to British and US regulators. They said traders at Lloyds rigged the estimates of borrowing costs submitted by the bank to help set the Libor, to benefit their own trading positions and those of their friends.

The British banks Barclays and Royal Bank of Scotland, Switzerland’s biggest bank, UBS, and Rabobank of the Netherlands have also been fined. Nine individuals have been criminally charged by the Justice Department. The settlements with Lloyds bring the banks’ total payments to date to nearly $4 billion.

‘‘Because investors and consumers rely on LIBOR’s integrity, rate-rigging fundamentally undermines confidence in financial markets,’’ Assistant US Attorney General Leslie Caldwell said in a statement.


Exchanges between traders and bank employees, quoted by regulators, show a lively stream of apparent efforts to artificially lower or raise the rates. Among the quotes cited in phone conversations, e-mails, and instant-message chats were: ‘‘Obviously we got the Libors down for you,’’ “Will be setting an obscenely high (rate) again today . . . ’’ and ‘‘Do you want us to keep the Libor higher?’’

Lloyds agreed to establish controls and employee training ‘‘to ensure the integrity and reliability’’ of the reports submitted by the bank in the Libor-setting process.

Lloyds said it has ‘‘fundamentally overhauled systems and controls’’ over the past three years. The actions cited by the regulators ‘‘were restricted to a specific area of the business and were not known about or condoned by the senior management,’’ Lloyds said.

The bank said it regards the actions of the individuals responsible ‘‘as totally unacceptable and unrepresentative of the cultural changes’’ it has made.

Barclays admitted in June 2012 that it had submitted false information to keep the rate low. Barclays agreed to pay a $453 million fine, and its chief executive and chairman resigned.


Several US cities and municipal agencies have sued banks that set the Libor. They are seeking damages for losses suffered as a result of an artificially low rate. Local governments hold bonds and other investments whose value is pegged to Libor.

Under a change taking effect this year, the Atlanta company that owns the New York Stock Exchange, IntercontinentalExchange, took over supervising the setting of the Libor from the British Bankers’ Association.

In addition to Lloyds, Barclays, Royal Bank of Scotland, UBS, and Rabobank, the banks that set LIBOR are Citigroup, JPMorgan Chase & Co., Bank of America, HSBC, Lloyds Bank, Societe Generale, BNP Paribas, Credit Agricole, Credit Suisse, Deutsche Bank, Royal Bank of Canada, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Bank, and Norinchukin Bank.