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Bank of England Pressed Banks to Lower Libor Rates, BBC Says

Updated on
  • Report cites secret recording of senior manager at U.K. bank
  • BOE says Libor wasn’t regulated in U.K. during crisis: BBC

The Bank of England repeatedly pressured commercial banks to lower their settings for the benchmark London interbank offered rate during the 2008 financial crisis, according to the BBC.

The report cited a secret recording in which a senior manager at a large U.K. bank instructed a Libor submitter to lower his rates.

“The bottom line is you’re going to absolutely hate this .... but we’ve had some very serious pressure from the U.K. government and the Bank of England about pushing our Libors lower,” the BBC cited the manager as saying on the recording.

A BOE spokesman said Libor and other global benchmarks “were not regulated in the U.K. or elsewhere during the period in question” and that the central bank has been assisting the Serious Fraud Office’s investigations into Libor manipulation, by providing, on a voluntary basis, documents and records.

John McDonnell, Shadow Chancellor for the U.K.’s opposition Labour party, called for an immediate investigation, saying the report “contradicts past assurances about the role of the Bank of England in the Libor scandal,” raising questions over trust in financial institutions.

Banks have paid more than $9 billion in fines to settle accusations they rigged the benchmark Libor rate, used to value trillions of dollars worth of financial products.

— With assistance by Lucy Meakin

(Updates with comments from BOE, McDonnell from fourth paragraph.)
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