Partly-state owned Lloyds Banking Group has been fined $370 million by UK and US authorities for the manipulation of LIBOR and other benchmark failings.

Partly-state owned Lloyds Banking Group has been fined $370 million by UK and US authorities for the manipulation of LIBOR and other benchmark failings.

The fine includes $105 million by the Commodity Futures Trading Commission, approximately $178 million by the UK Financial Conduct Authority and $86 million from the US Justice Department.

The manipulation of submissions covered by the settlements took place between May 2006 and 2009. Lloyds said in a statement that the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings.

The FCA’s fine is the joint third-highest ever imposed by the regulator or its predecessor, the Financial Services Authority, and the group is the seventh company to be fined by UK and US authorities in the LIBOR-rigging investigation.

The FCA said that £70 million ($119.9 million) of the fine relates to attempts to manipulate the Repo Rate benchmark to reduce the fees payable to the Bank of England for participation in the taxpayer-backed special liquidity scheme between 2008 to 2009.

Lloyds said that it had paid the Bank of England £7.76 million in compensation for the fees that it did not pay.

“The firms were a significant beneficiary of financial assistance from the Bank of England through the SLS.  Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable.  This falls well short of the standards the FCA and the market is entitled to expect from regulated firms,” said Tracey McDermott, the FCA’s director of enforcement and financial crime.

As well as attempting to rig the US LIBOR rate, Lloyds also colluded with Rabobank to influence the Japanese yen LIBOR rate. Rabobank settled with the FCA last year.

The FCA said that 16 individuals at the firms, seven of whom were managers, were involved in the various forms of LIBOR manipulation, including one manager who was also involved in the Repo Rate misconduct.

Lloyds said that it condemned the actions of the individuals responsible, which it regards as “totally unacceptable and unrepresentative of the cultural changes that the group has implemented.”

“The behaviours identified by these investigations are absolutely unacceptable. We take the findings of these investigations, which relate to issues from some years ago, extremely seriously. Together, the board and the group’s management team have taken vigorous action over the last three years to prevent this kind of behaviour, through closing or reducing our legacy investment banking activities,” said António Horta-Osório, chief executive of Lloyds Banking Group.

Scandal

Lloyds was bailed out by the British government in 2008 following the financial crisis to save it from collapse and has been partly-owned by the British taxpayer ever since.

The penalty for Lloyds comes two years after Barclays was fined $450 million by US and UK regulators for trying to manipulate LIBOR, which led to the resignations of Barclays' chief executive Bob Diamond and chairman Marcus Agius in the UK.

Following the LIBOR scandal in 2012, a number of other banks were also fined, including UBS and Royal Bank of Scotland, for fixing the rate in order to boost the profits of traders prior to the financial crisis.

At the end of last year, the European Union also levied a record fine of €1.7 billion ($2.3 billion) on six European and US banks, including Deutsche Bank, Societe Generale, Royal Bank of Scotland, and Citigroup.

LIBOR is based on the interest rates leading banks charge when loaning money to other banks overnight, which is supposed to represent the cost of a bank's lending activities.

As the primary benchmark for short-term interest rates globally, LIBOR is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer-lending products.

The scandal arose both during and before the financial crisis when it was discovered that banks were manipulating rates so as to profit from trades or give the impression they were more credit-worthy than they actually were.