Libor Banks to Face Significant Civil Claims, Bernstein Says

Barclays Tumbles as Libor Fine Sparks Lawsuit Speculation
A logo sits outside a Barclays Plc bank branch in London. Photographer: Simon Dawson/Bloomberg

Barclays Plc and other banks that settle regulators’ allegations they attempted to manipulate a key London borrowing rate will face “significant civil claims” in coming years, according to Sanford C. Bernstein & Co. analysts.

Barclays, the U.K.’s second-largest lender, was fined a record $451 million this week after investigators found traders and senior managers tried to rig the London interbank offered rate and the euro interbank offered rate, known as Libor and Euribor. Citigroup Inc., Royal Bank of Scotland Plc, UBS AG, ICAP Plc, Lloyds Banking Group Plc and Deutsche Bank AG are among the firms regulators are investigating.

“This is a major regulatory issue for the Libor banks that will likely generate significant civil claims over the next four to five years,” Bernstein analysts led by Brad Hintz wrote in a research note today. “Investors should not minimize the importance of this matter.”

The analysts’ report cites studies whose results “imply that the Barclays manipulation was probably successful and further imply that more than just one bank was involved in the scheme.” Barclays and regulators haven’t said the attempted manipulation was successful.

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