US probes big banks over interest-rate fiddle suspicions

United States authorities are considering invoking anti-cartel laws against some of the world's biggest banks as part of an investigation into whether they colluded to manipulate interest rates during the credit crisis.

An investigation by the US Justice Department and the Securities and Exchange Commission is trying to find out if banks published misleading data to play down the effects of the escalating crisis between 2006 and 2008.

The inquiry is focused on the calculation of the London Interbank Offered Rate - known as Libor, - which is central to the operation of financial markets.

The price of trillions of dollars of loans and derivatives are set with reference to Libor, and it was one of the most closely watched measures of financial market stress during the crisis.

The US is examining suspicions that banks fed in misleading information to keep Libor artificially low or to hide the fact that their own borrowing costs were higher - something that could have triggered panic among shareholders and clients.

Libor is calculated by the British Bankers' Association based on information from a panel of banks which make public the interest rate at which they can borrow money.

Last month, UBS became the first bank to publicly disclose that it had been subpoenaed in the US as part of the investigation.

"UBS understands that the investigations focus on whether there were improper attempts by UBS, acting on its own or with others, to manipulate Libor," it said then.

Barclays, Citigroup and Bank of America are also believed to have received subpoenas, and other banks on the BBA panel have also been drawn into the investigations.

The UK's Financial Services Authority and Japanese regulators are among those taking an interest.

- Independent