QUOTE AND NEWS
Reuters  May 13  Comment 
One of five former Barclays bankers on trial for the alleged rigging of a key Libor benchmark told a court on Friday he had lied about submitting rates for traders because he felt under pressure from his manager and the bank to "toe the line".
Financial Times  May 12  Comment 
Jonathan Mathew tells a court his manager used to humiliate him by hitting him with a bat
guardian.co.uk  May 12  Comment 
Barclays trader tells trial that he was given no training and was hit with mini baseball bat and often mocked, and didn’t realise rate changes were illegal A Barclays trader accused of conspiring to fix the Libor benchmark lending rate was...
guardian.co.uk  May 11  Comment 
Court lifts order restricting plea during trial of five others for manipulating benchmark for pricing financial transactions worldwide Peter Johnson, a former senior Barclays banker, pleaded guilty in October 2014 to conspiring to manipulate...
guardian.co.uk  May 4  Comment 
Tom Hayes hires lawyer who led Gary McKinnon extradition case to take appeal to Criminal Cases Review Commission Tom Hayes, serving 11 years for rigging Libor rates, has hired a high-profile lawyer to take his appeal to the Criminal Cases Review...
Clusterstock  May 4  Comment 
Tom Hayes, the former banker convicted for his role in rigging the London Interbank Offered Rate (LIBOR) is trying to raise money for an appeal against his conviction — using a crowdfunding platform. Hayes, who could serve as long as 11-years...
Clusterstock  May 3  Comment 
By Kirstin Ridley LONDON (Reuters) - Barclays should have given its traders more training on Libor and tighter rules on their communications, a senior executive at the British bank told the trial of five former bankers charged with manipulating...
guardian.co.uk  Apr 27  Comment 
Michael Bagguley, a prosecution witness in the trial of five former Barclays traders, denied any involvment in or knowledge of rate rigging Senior Barclays executive Michael Bagguley told a London court that he had never sought to influence Libor...
Financial Times  Apr 26  Comment 
Libor trial witness says he had no idea traders were allegedly making requests of Libor submitters
guardian.co.uk  Apr 18  Comment 
Former BBA director John Ewan tells trial of five men that he took word of senior Barclays employee at ‘face value’ The man in formerly in charge of overseeing the Libor benchmark lending rate took banks at “face value” when they said it...




 
TOP CONTRIBUTORS

The graph to the left is for the 3 month LIBOR.

LIBOR, or the London Interbank Offered Rate, is the average interest rate between banks in the London interbank market. LIBOR is a widely used short-term interest rate benchmark since it is designed to reflect the cost of borrowing between some of the world's largest, most reputable banks.

What is LIBOR?

There isn't just one LIBOR; there are numerous rates determined by two variables:

Every business day at just after 11:00 am London time, the British Bankers' Association, in conjunction with Reuters, releases new rates for each combination of these.[3] For example, there's a new 3-month LIBOR for the yen, overnight LIBOR for the euro, and 2-week LIBOR for the pound released daily. These rates indicate both the health of the currencies (and their respective economies) relative to one another and expectations about future economic conditions.

There are ten LIBOR panels, one for each of the ten currencies for which the rate is determined. Each panel is composed of at least eight contributor banks, chosen for their reputations and their perceived expertise in a given currency. The BBA takes the daily deposit rates reported by its designated contributor banks and calculates the mean of the middle 50%; the resulting number is the LIBOR for the currency in question.[4] The average rates at which these banks say they would lend to one another is taken as an indication of the health of the banking systems of the ten LIBOR currencies. A list of the panels and their members as of May 30, 2008, can be found here on the British Bankers' Association's website.

Why is LIBOR important?

Not only does LIBOR provide information about the cost of borrowing in different currencies, it actually influences it. LIBOR is used as the basis for other interest rates across the globe. IE, variable interest rate loans such as mortgages and car loans will often be quotes at LIBOR + a percentage. For example, a loan that was LIBOR + 5% would charge 10% interest when the LIBOR is 5%, and 7% when the LIBOR is 2%.

Estimates for the total value of financial products with rates tied to LIBOR vary widely, from as low as $150 trillion,[5] to $360 trillion, [6]to as high as $500 trillion.[7]

LIBOR impacts financial instruments and products including:

Additionally, the difference between the libor rate and the interest rate on treasury bills is a key marker of the financial health of banks. For more information, see TED Spread.

Criticism

On May 29, 2008, the Wall Street Journal reported that certain banks had been reporting lower rates to the BBA than what WSJ analysis suggested they should have been.[8] Given the trillions of dollars tied to the LIBOR, even a small inaccuracy in either direction can cost lenders, borrowers, companies, or even whole economies billions of dollars. The WSJ study estimated that, if true, the artificially low U.S. dollar LIBOR saved U.S. borrowers about $45 billion over the first four months of 2008.[9] The banks, however, denied this claim and stuck by the rates they'd reported to the BBA and Reuters.

Charts





References

  1. British Bankers' Association - BBA LIBOR Panels
  2. BBA - Historic LIBOR Rates
  3. BBA LIBOR Frequently Asked Questions, British Bankers' Association.
  4. London Interbank Offered Rate - Wikipedia
  5. Yanked from Obscurity: Why Finance Experts Are Rethinking LIBOR - Knowledge@Wharton
  6. We are the World: We are LIBOR - LIBORATED.com
  7. Bankers Cast Doubt On Key Rate Amid Crisis - WSJ.com
  8. Study Casts Doubt on Key Rate - WSJ.com
  9. Study Casts Doubt on Key Rate - WSJ.com
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