Lessons from the Hayes conviction

From The Financial Express –

“Last week’s conviction of Tom Hayes, in the infamous London Interbank Offered Rate (LIBOR) rigging scandal, should be an eye-opener for Indian regulatory authorities. The scandal, which peaked around 2008, involved some major banks—including JP Morgan, Deutsche Bank and Barclays Bank—artificially understating the interest rate.

While it may no longer be shocking to hear Hayes pleading that such interest rate manipulations were common knowledge, both to his seniors and the banking sector in general, it may be heartening to note that RBI has taken proactive steps to counter similar manipulations of MIBOR—Mumbai Interbank Offered Rate—which was originally set up on the lines of LIBOR. Although it is not a global benchmark like LIBOR, it is, as the NSE defines it, the “yardstick for the money market”, serving as a reference in the interest rate swap market in India and a benchmark rate for majority of deals struck for interest rate swaps, forward rate agreements, floating rate debentures and term deposits.”

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Deutsche Bank disputes regulator's Libor report allegations

From Reuters –

“Deutsche Bank has disputed allegations by Germany's financial watchdog, sources close to the lender said, in its official response to a preliminary report into interest rate manipulation which threatens sanctions against the bank and individuals.

The watchdog, Bafin, issued scathing criticisms of several executives at Deutsche Bank in a report, sent to the lender in May, on attempts to manipulate interbank interest rates such as Libor, according to a copy of the report published by the Wall Street Journal on Friday.

Managers at Germany's largest bank failed to ask tough questions or establish basic controls to prevent traders from attempting to manipulate interest rate benchmarks that determine prices for trillions of dollars in assets like home loans and credit cards, the report alleged. A copy of the report was posted online by the newspaper.”

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Deutsche Bank bosses resign following Libor manipulation scandal

From The Guardian –

“The two joint chief executives of Deutsche Bank are to step down, in an unexpected move that comes shortly after the investment bank was fined for its role in Libor manipulation and criticised for its conduct.

After an unscheduled meeting held by the bank’s supervisory board on Sunday, the German lender said that Anshu Jain would leave at the end of this month, with Jürgen Fitschen staying on until the bank’s annual meeting in 2016. Jain will continue to advise the bank as a consultant until January.”

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