Seven of the world’s biggest banks have been subpoenaed in New York and Connecticut in a probe into the alleged rigging of Libor, a benchmark rate for global borrowing, The Globe and Mail reported on Thursday.
The seven banks that have received subpoenas comprise Citigroup, JP Morgan, Barclays, HSBC, UBS, Deutsche Bank and Royal Bank of Scotland. U.S. media estimate the seven banks involved in the Libor rigging scandal may be fined a total of $20 billion.
The move comes after Barclays, Britain’s second biggest bank by assets, was fined a record 290 million pounds ($450 million) by UK and U.S. regulators last month for manipulating the London interbank offered rate, a benchmark gauge for a market worth $360 trillion in securities.
Following the Barclays fine, the U.S. regulators have said they are probing other banks for potential Libor manipulation.
Libor is determined using rates submitted by a group of 18 leading banks, which estimate how much it costs them to borrow from one another in 10 different currencies and 15 borrowing periods ranging from overnight to one year.
Libor is the primary benchmark that influences the cost of securities from mortgages to derivatives.
The Libor scandal erupted in early July in the UK after news that Barclays and other banks had understated the rate during the 2008 financial crisis to make themselves look healthier to the public. Barclays Chairman Marcus Agius had to quit in early July amid the rate scandal.
