Dáil Éireann Debate, Tuesday - 10 July 2012
113 Deputy Patrick Nulty asked the Minister for Finance if there is a possibility that banks operating in here have attempted to manipulate inter-bank lending rates, along the lines that Barclay’s PLC in London, England, have been found to have attempted to rig the London inter-bank offered rate, Libor, and euro inter-bank offered rate, Euribor; if he will take steps to investigate this issue; and if he will make a statement on the matter. [33095/12]
View answer132 Deputy Michael McGrath asked the Minister for Finance if the London Interbank Offered Rate scandal at Barclay’s Bank in the UK has any implications for the Irish Government, the National Treasury Management Agency or any financial entities operating here; and if he will make a statement on the matter. [33569/12]
View answerI propose to take Questions Nos. 113 and 132 together.
Libor is an average interest rate compiled by the British Bankers Association (BBA) based on estimates provided by a number of banks of what they would be charged if borrowing from other banks. Along with Euribor, it is a benchmark for interest rates around the world. Additionally Libor and Euribor are commonly used as reference rates for interest rate swaps and other derivative instruments. The integrity of these benchmark reference rates is of fundamental importance to international financial markets.
Barclays Bank has been fined by the UK Financial Services Authority, the US Commodity Futures Trading Commission and the US Department of Justice for attempted manipulation of Libor and Euribor rates. A number of international investigations are ongoing, including one by the European Commission, and the British Bankers Association is currently undertaking a review of the way Libor is set and is expected to publish its findings shortly.
Allied Irish Bank and Bank of Ireland are members of the panel of 43 European banks which contribute quotes for the setting of Euribor but are not involved in the setting of LIBOR, the London Interbank Offered Rate.
I am informed by the NTMA that both NTMA and NAMA have substantial portfolios of derivative products, some of which use Libor (or Euribor) as the reference rates. However, much of that exposure is reduced by netting. The NTMA will continue to monitor the situation in order to asses any potential impact on the Exchequer.
I am informed by the Central Bank that this event may have had a very limited impact for some of the financial entities operating here, on account of the widespread usage of LIBOR as a reference price by most banks, including those in Ireland. Thus far the Central Bank has not received any complaints from the regulated banks nor have there been any issues raised with the Central Bank on this issue. In the course of its normal regulatory engagement with the banks it will raise this topic as appropriate.
