Barclays Traders Were Anxious About Libor Submissions in 2007

  • Employees expressed worries in e-mails, according to testimony
  • Five traders on trial, accused of manipulating Libor rates

Barclays Plc employees were voicing concerns to senior executives about the accuracy of their Libor submissions as early as 2007, according to e-mails released Tuesday during a London trial of five traders accused of fixing the benchmark rates.

"I’m feeling increasingly uncomfortable about the way in which USD Libors are being set by the contributing banks, Barclays included," Peter Johnson, a former Barclays’ U.S. dollar Libor submitter said in a Dec. 2007 e-mail to Mark Dearlove, the head of money markets. "My worries are mainly about 1, 2 and 3-month Libor at the moment, but all Libors are a bit of a concern."

The e-mails were shown to jurors Tuesday as defense lawyers questioned former Barclays executive Eric Bommensath about what he knew about Libor manipulation in the trial’s third week. Though Bommensath, a former member of the bank’s executive committee who isn’t on trial, was copied in on some e-mails, he said he couldn’t recall discussing Libor submissions with traders. He said he didn’t know those he supervised in the fixed-income business were making requests to change the bank’s submissions to suit their positions.

Barclays’ submissions were "a barometer for the bank’s health during a market period where other banks were collapsing. Are you really telling this jury it did not come up in meetings?” Hugh Davies, lawyer for Jay Merchant, asked Bommensath.

"I don’t remember discussing Libor submissions at the time," he replied.

Five Barclays traders are on trial in London, accused of conspiring to manipulate the benchmark rates that are used to value trillions of dollars in securities and loans. Merchant, Jonathan Mathew, Stylianos Contogoulas, Alex Pabon, and Ryan Reich deny conspiracy to defraud charges dating from June 1, 2005 to Aug. 31, 2007.

Requests to change submissions were "improper" and none were ever brought to his attention prior to the outbreak of the scandal, Bommensath said. Defense attorneys said Bommensath and another executive, Harry Harrison, knew about the "practices" that amounted to the rigging of the London interbank offered rates.

"You don’t need to be a central banker to know that some people would make more than they should and some people would lose more than they should," if this kind of behavior was permitted, Bommensath said.

Bommensath ran Barclays non-core business until he left last year, and is a former global head of fixed income. He is the most senior executive from the bank to give evidence in the trial to date.

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