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Landesbank Berlin Quits Euribor Amid Bank Exodus From Panel

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May 1 (Bloomberg) -- Landesbank Berlin AG, a German regional lender, became the sixth bank this year to stop contributing to the panel setting Euribor, adding to an exodus that includes UBS AG and Rabobank Groep.

The bank also stopped contributing to the Eonia and USD Euribor benchmarks, Euribor-EBF, the Brussels-based industry group that runs the rates, said in a statement on its website.

Firms are withdrawing from benchmarks amid growing concern that they may face lawsuits, fines and criminal penalties if found to have engaged in wrongdoing after three banks were fined more than $2.5 billion for rigging the London interbank offered rate and Euribor. Michel Barnier, the European Union’s internal market and services commissioner, said in February he was considering forcing lenders to contribute to key market rates to preserve their integrity of market benchmarks.

“The bank probably doesn’t want to be involved in something that is getting such poor publicity, and they think it’s best we step away,” said Christopher Wheeler, a banking analyst at Mediobanca SpA in London. “I also suspect it’s reducing considerably its activity in the large wholesale interbank lending market.”

Euribor-EBF Director Cedric Quemener confirmed Landesbank Berlin’s exit from the panels, without elaborating. Frank Weidner, a Landesbank Berlin spokesman, didn’t respond to an e-mail seeking comment outside business hours.

Remaining Members

Bayerische Landesbank, Rabobank and Raiffeisen Bank International AG left Euribor in January. UBS, Switzerland’s biggest bank, and Svenska Handelsbanken AB left in March.

The euro interbank offered rate is derived from a daily survey of lending quotes conducted for Euribor-EBF by Thomson Reuters Corp. There are 36 contributors on the Euribor panel, including three German Landesbanks: Norddeutsche Landesbank, Landesbank Baden-Wuerttemberg and Landesbank Hessen Thueringen.

“I imagine other Landesbanks are weighing up an exit,” said Roger Francis, a credit analyst at Mizuho International Plc in London. “Once upon a time being on the panel was a costless status symbol. Now it requires lots of compliance with potential regulatory and legal downside.”

Officials at the three lenders didn’t immediately respond to e-mails outside business hours. Since Euribor-EBF started USD Euribor, a gauge of dollar funding costs in the interbank market, in April 2012, the number of contributors has dropped to 13 from 20.

Three-month Euribor, which tracks bank-loan rates over that maturity, was little changed at 0.207 percent, down from 0.708 percent a year earlier.

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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