BBA agrees to give up Libor control
26 September 2012
The British Bankers' Association said it would agree with any recommendation by Martin Wheatley, the head of financial conduct at the Financial Services Authority, to hand over control of Libor to another body.
The BBA said in a statement that it had been co-operating with Wheatley's review of Libor ahead of the publication of his report on Friday.
''If Mr Wheatley's recommendations include a change of responsibility for Libor, the BBA will support that,'' it said.
The BBA has come in for severe criticism for the manner in which it had run Libor, although it had argued that it was not directly responsible for compiling the rate.
The criticism comes after the July revelation that Barclays had attempted manipulation of Libor for several years. Barclays was still the only bank to have formally settled with the US and British authorities over the scandal paying £290 million pounds in fines.
An announcement of major overhaul of the way Libor was run is expected in Wheatley's Mansion House speech on Friday. The review has been ordered by George Osborne as criticism rises both in Britain and abroad of the ease with which banks appeared to be able to have rigged the world's benchmark borrowing rate.
The role of the BBA as guardian of Libor, used in the setting of rates for at least $300 trillion of securities, has been under pressure since 2008 when the Bank for International Settlements first raised concern that the benchmark was being manipulated.
The BBA's response was branded inadequate by the Bank of England, while according to US treasury secretary Timothy Geithner private, unregulated bodies such as the BBA shouldn not be tasked with oversight of rates such as Libor.