June 28 - Britain says it has brought in the fraud squad to investigate possible crimes and would tighten laws over attempts to manipulate lending rates, a scandal which has engulfed Barclays and is expected to spread to other banks. Ciara Sutton reports.
It sent Barclays shares plunging around 14 percent and this latest banking scandal now looks set to embroil banks and chief executives across the world. The UK lender has agreed to pay almost half a billion dollars to regulators for manipulating the rates at which banks lend to each other. UK Finance Minister George Osborne: (SOUNDBITE) (English) BRITISH FINANCE MINISTER GEORGE OSBORNE, SAYING: "Those responsible should be held responsible. We want our financial services supporting the creation of jobs and prosperity for millions. Now this government is sweeping away the regulatory system that failed. It will protect tax payers, it will punish wrongdoing and put right the wrongs of an era of financial irresponsibility." Barclays Chief Executive Bob Diamond has apologised and says he and other executives will forgo their bonuses this year. But there are growing calls for him to resign, now the UK has brought in the fraud squad to investigate possible crimes. Prime Minister David Cameron says Barclays execs have big questions to answer. (SOUNDBITE) (English) UK PRIME MINISTER, DAVID CAMERON, SAYING: "This is extremely serious. They've paid a very large fine and quite rightly. But frankly, the Barclays management team have some big questions to answer. How did this happen? Who is responsible? Who is going to be held accountable for it?" The settlement reached with Barclays raises questions about the London interbank offered rate - or Libor - which underpins around 360 trillion dollars of loans and financial contracts. Barclays' conduct resulted in millions of borrowers paying too much interest on their debt between 2005 and 2009. Head of Trading at TJ Markets, Manoj Ladwa says the full repercussions are still to be felt. (SOUNDBITE) (English) HEAD OF TRADING AT TJ MARKETS, MANOJ LADWA, SAYING: "It's likely to hit the banking sector as a whole. It's a massive blow which is evident by the size of the fine that the FSA and SEC have imposed on Barclays. It affects the markets on a macro level and it affects Barclays on a personal level as well as there are breaches of security internally within the business." Most of the world's biggest banks are under investigation as regulators from Europe, North America and Japan attempt to prove banks rigged rates. They include HSBC, Citigroup, RBS and Deutsche Bank. The scandal comes as yet another blow to the image of the banking sector. Barclays may be the first to settle on this case but it's unlikely to be last. Ciara Sutton, Reuters