June 12 (Bloomberg) -- The British Bankers’ Association said it will embargo lenders’ individual contributions to the London interbank offered rate for three months as part of an effort to restore confidence in the scandal-tainted benchmark.
Banks’ submissions will still be made available to regulators in real-time to allow oversight, the London-based BBA said in a statement on its website today. Publication of same-day one-week and one-month Euro Libor rates will also cease from July 31, the group said.
The embargo was one of the recommendations made by regulators after Barclays Plc was fined a record 290 million pounds ($454 million) last year for rigging the benchmark. Regulators are trying to prevent Libor from being used as an indicator of a lender’s creditworthiness. During the financial crisis, lenders such as Barclays understated their cost of borrowing to appear healthier than they were.
“Restoring confidence in Libor as a reliable benchmark is an absolute priority for the BBA,” BBA Chief Executive Officer Anthony Browne said in the statement. “We have been working hard with regulatory authorities and the Government to put in place the necessary reforms ahead of it transferring to a new owner.”
The BBA, which created the benchmark in 1986, is being stripped of its oversight of the rate as part of the overhaul. The group also stopped quoting Libor for eight maturities and stopped all quotes for two currencies at the end of last month.
Libor is calculated by a poll carried out daily by Thomson Reuters Corp. on behalf of the BBA that asks firms to estimate how much it would cost to borrow from each other for different periods and in different currencies. The top and bottom quartiles of quotes are excluded, and those left are averaged and published for individual currencies before noon in London.
To contact the reporter on this story: Edward Evans in London at firstname.lastname@example.org
To contact the editor responsible for this story: Edward Evans at email@example.com