July 15, 2012

Barclays makes public apology after rate-rigging scandal

Barclays bank took out large UK newspaper ads Saturday to say sorry to "all Barclays customers and clients" in the wake of a rate-rigging scandal which has hammered its reputation.

The public apology, printed in papers including the Financial Times and the Times of London and signed by outgoing chairman Marcus Agius, says the bank is "truly sorry for what has happened and that you have been let down."

It continues: "It is our actions now over the coming months and years that will make the difference.

"You are the lifeblood of our business, and we will not allow ourselves to be distracted from what really matters -- delivering for you, day in and day out."

Barclays is determined to put its customers "at the heart of everything we do" and must earn the right to retain their business, the statement concludes.

Agius's resignation as chairman was announced 12 days ago, as the scandal over the rates at which banks lend each other money gathered pace. He will step down once a replacement is found. Following wide pressure, the bank's former chief executive, Bob Diamond, resigned a day later.

The scandal involves a lending rate, known as the London interbank offered rate, or Libor, which is set every morning by banks posting the rate at which they are willing to borrow with the British Bankers' Association. The BBA publishes Libor as a result of this.

The Libor affects how much interest ordinary people pay on everything from credit card debt to home mortgages and student loans.

Barclays was fined $450 million by British and American regulators last month after admitted some of its trading desks purposely under-reported its interest rates.

A report from the UK's Financial Services Authority concluded the rate-fixing scandal was of the "utmost seriousness."

Between 2005 and 2009, when Diamond was in charge of the investment branch of Barclays bank, traders were influencing the pricing of rates which impact up to $800 trillion of securities.

E-mails revealed as part of the rate-fixing investigation showed traders were seeking beneficial rates for their trading positions. Diamond has blamed the wrongdoing on 14 traders out of "a couple thousand."

During the credit crisis of 2007 and 2008, Barclays' high Libor postings came under scrutiny and the bank, concerned about "unfounded negative perceptions," lowered its Libor submissions, according to Barclays notes to the Treasury Committee.

A host of other banks, including Deutsche Bank, Royal Bank of Scotland, Credit Suisse, Citigroup, JPMorgan Chase and UBS, are being investigated by regulators. Lawsuits have been filed against the banks in the United States, and are being prepared in the UK.

CNN's Isa Soares and Alex Felton contributed to this report.

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