The cosiness of these colleagues, which allowed traders to request massaged Libor and Euribor submissions, is particularly disturbing given there is supposed to be a "Chinese Wall" between such departments within banks.
The FSA found that between January 2005 and May 2009, at least 173 requests for US dollar Libor submissions were made to Barclays’ submitters, which included 11 requests based on communications from traders at other banks.
Meanwhile, between September 2005 and May 2009 at least 58 requests for Euribor submissions were made to Barclays’ submitters, which included 20 requests based on communications from traders at other banks.
Requests for yen Libor submissions were also made in the same time period.
At least 14 Barclays derivatives traders made these requests, including senior employees.
"For you…anything"
One trader, identified as Trader C in the FSA documentation sent an email to a submitter which said: "If it’s not too late low one month and three month [US dollar Libor submissions] would be nice, but please feel free to say ‘no’… Coffees will be coming your way either way, just to say thank you for your help in the past few weeks."
A submitter responded to Trader C: "Done… For you big boy."
In another response to Trader C a submitter said: "For you… anything. I am going to go 78 and 92.5 [for one month and three month US dollar Libor submission]. It is difficult to go lower than that in three month, looking at where cash is trading. In fact if you didn’t want a low one I would have gone 93 at least."
An email which indicated the regularity of the requests was made by a submitter in May 2005: "Hi All, Just as an FYI, I will be in noon’ish on Monday," to which Trader B responded, "Noonish? Whos going to put my low fixings in? hehehe." The submitter then anwered, "[X or Y] will be here if you have any requests for the fixings."
Diamond faces tough questions
Barclays’ CEO Bob Diamond has declared he and three of his top executives will forego their bonuses after it was revealed the bank settled for a record combined fine of £290m for its manipulation of Libor.
On top of the biggest FSA fine ever handed out (£59.5m) the bank must pay US regulators $360m (£231m) which is split $200m to the US Commodity Futures Trading Commission (CFTC) and $160m to the US Department of Justice.
The fines are part of a larger probe into global banks’ conduct regarding Libor and its European equivalent Euribor to see if systemic manipulation of it has occurred.
Other big global firms to be approached in the investigation include Citigroup, HSBC, Royal Bank of Scotland and UBS, although no criminal charges have been filed and no other banks have yet been fined.
Diamond is now set to be questioned in front of the Treasury Select Committee, led by chairman Andrew Tyrie, who has already been reported as stating attempts to manipulate Libor look "inexcusable".
He is also reported to have said the banks were acting in concert and so this "is not the end of the story".
