Japan Bank Lobby Starts Review of Tibor Rate Submitters
The Japanese Bankers Association is reviewing member banks to ensure they follow its guidelines for submitting Tokyo interbank offered rates as global finance regulators widen a probe into interest-rate manipulation.
The group yesterday sent questionnaires to the 16 reference banks that submit yen-denominated Tibor rates to the association and the 15 lenders that submit euro-yen Tibor rates, Hisanao Aoki, a spokesman for the Tokyo-based lobbying group, said in an interview, declining to elaborate details of the questions. Banks have been given a deadline of Aug. 10 to respond, he said.
Barclays Plc (BARC) last month was fined 290 million pounds ($454 million) for rigging London interbank rates, prompting authorities in Europe, Asia and the U.S. to broaden inquiries into manipulation of benchmark gauges for borrowing costs. Lobby officials today met with the Democratic Party of Japan’s finance committee, headed by former Morgan Stanley banker Tsutomu Okubo, to explain how Tibor is set.
“Barclays’ fine is enormous and far above the rate of such penalties typically imposed on Japanese financial institutions for wrongdoings,” Okubo said in his opening remarks at the panel’s meeting this morning. “We must strengthen investors’ trust in Tokyo’s financial market.”
The reference banks, including the lending units of Mitsubishi UFJ Financial Group Inc. (8306), Sumitomo Mitsui Financial Group Inc. (8316), Mizuho Financial Group Inc. (8411), JPMorgan Chase & Co. (JPM) and Deutsche Bank AG (DBK), are responsible for submitting interbank offered rates to the association, which compiles them and sets the benchmark, according to the lobbying group’s website.
Association Chairman Yasuhiro Sato said today that while process for setting Tibor is sound, he is open to making changes based on the review.
“There aren’t any problems with the structure of Tibor setting,” Sato said at a news conference in Tokyo. “We will examine the results of our ongoing review, and if there’s anything we can do to improve Tibor setting and strengthen trust in the benchmark, we would reform the structure.”
He also said no Japanese lenders were found to have been involved in Libor manipulation.
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