- Analysts say penalties could dwarf the record £290m fine for Barclays
- HSBC, RBS and Lloyds all saw shares plummet in value in a sign investors fear the crisis could have greater ramifications
Fears that more banks will be hammered with colossal fines totalling billions of pounds grew today after George Osborne revealed that Barclays was ‘not alone’ in its efforts to rig interest rates.
The fallout from the record £290million penalty given to Barclays was being felt across the City as confidence in the banking sector sank once again.
Analysts warned that the cost of lawsuits could dwarf the fine handed to Barclays.
Shares in rival banking groups HSBC, RBS and Lloyds plummeted in value today in a sign that investors fear the crisis will bring greater ramifications.
Dramatic: Shares in RBS Group were hit hard as details of the Barclays penalty rattled the banking sector
The fine was imposed on Barclays by the Financial Services Authority (FSA) and US regulators over attempts to rig the Libor (London Interbank Offered Rate) and Euribor interbank lending rates.
Industry experts believe the record penalty might have been even higher had Barclays not co-operated with investigators.
It is thought that Barclays provided useful information, with the US Department of Justice referring to its ‘extraordinary co-operation’, which helped save it from a criminal prosecution.
The FSA is investigating activities at Lloyds, HSBC and Royal Bank of Scotland.
The US Department of Justice has said that criminal investigations into ‘other financial institutions and individuals’ are ongoing.
Financial institutions also believed to be under the regulators’ microscope include UBS of Switzerland, JP Morgan, Deutsche Bank, and Citigroup of the US.
Sandy Chen, banking analyst at Cenkos Securities, said he was braced for billions of pounds in fines and damages across the sector.
He said: ‘The cost of lawsuits related to the Libor rate scandal will likely dwarf the £290 million fine imposed on Barclays – and since Royal Bank of Scotland, HSBC and Lloyds Banking Group have also been named in lawsuits, we expect they will also face significant fines and damages.
‘We are pencilling in multi-year provisions that could run into the billions.’
Mr Chen said recent disclosures on interest rate derivatives gave an indication of each bank’s potential exposure to the rate scandal.
RBS reported £422billion, HSBC reported £328billion and Lloyds recorded £43 billion, according to Mr Chen.
