By Alex Barker in Brussels
Regulators investigating alleged manipulation of interbank lending rates have expanded their probe in Europe, launching fresh raids on several big banks in London and the eurozone.
The unannounced inspections are the latest stage of a growing international investigation into how the biggest financial institutions agree rates covering the bulk of euro-, dollar- and yen-denominated instruments.
The European Commission has been examining alleged exploitation of the Euro Interbank Offered Rate, or Euribor, the benchmark rate at which European banks lend to each other for several months. The raids covered multiple sites, including premises in London, France and Germany.
A spokesperson for Joaqu?n Almunia, the European Union competition commissioner, confirmed that a series of inspections had begun on groups ?active in the sector of financial derivative products linked to the Euribor.
?The Commission has concerns that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices.?
Investigators from Washington, Brussels and Tokyo are working together for more than a year to probe whether Libor, the reference point for $350,000bn in contracts, and Tibor, the smaller Tokyo-based version, were rigged at the height of the financial crisis.
Some of the lines of investigation include both antitrust violations, misreporting of borrowing costs and alleged collusion between traders and bank treasury departments, who play a role in setting the interbank rates.
At the peak of the 2008 financial crisis, some commentators argued that the Libor rates did not accurately reflect borrowing rates at the time.
The European Commission declined to list those banks that were targeted by the raids on Tuesday. In the Libor case, information has been requested from all 16 banks on the London panel between 2007 and 2008. The Euribor panel involves more institutions, with 40 members.
Other regulators involved in the worldwide probe into interbank rates include the US Securities and Exchange Commission, the Commodity Futures Trading Commission, the US Department of Justice, the UK Financial Services Authority and the Japanese Financial Supervisory Agency.
UBS, Bank of America, Citigroup and Barclays are among several big institutions subpoenaed by US regulators probing the Libor rate for US dollars.
? The Financial Times Limited 2011