In June of 2012, gave Barclays plc that they manipulated the London interbank offered rate (LIBOR) – a benchmark interest rate, which is of fundamental importance for the functioning of international financial markets and that was the basis for the trillions of dollars of financial transactions. Between 2005 and 2009, Barclays, one of the world’s largest and most important banks manipulated Libor to profits and / or limit losses from derivative transactions winning. In addition, between 2007 and 2009 the company had made dis … Read more »

In June of 2012, gave Barclays plc that they manipulated the London interbank offered rate (LIBOR) – a benchmark interest rate, which is of fundamental importance for the functioning of international financial markets and that was the basis for the trillions of dollars of financial transactions. Between 2005 and 2009, Barclays, one of the world’s largest and most important banks manipulated Libor to profits and / or limit losses from derivative transactions winning. In addition, between 2007 and 2009, the Company had dishonestly low prices LIBOR submission made to dampen speculation and negative comments on the media company’s profitability during the financial crisis. In billing with UK and U.S. regulators, the company agreed to pay $ 450 million penalty. Within a few days of the settlement, had Barclays’ CEO, Robert Diamond, resigned under pressure from the British regulatory authorities. Diamond accused a small number of employees for the trading of derivatives in LIBOR related injuries and referred to their actions as “reprehensible”. How to limit the market and media speculation of affordability Barclays’ for rigging LIBOR rates, diamond denied personal wrongdoing, and argues that, if anything, Barclays honest in its LIBOR submissions than other banks, how banks were so worried was later could be partially nationalized seem to borrow at a lower rate than Barclays. This case explains why LIBOR was an integral part of the global financial crisis, the mechanism used to create the speed and what Barclays have done wrong. The case provides an examination of: i) the consequences of violating the confidence of market participants, ii) cultural and leadership deficiencies in Barclays’; iii) the challenge of effective competition in a market where systemic and widely understood, corruption takes place, iv) the complicity of regulators in maintaining a corrupt system, v), what you can or not, an effective remedy for the systemic flaws in LIBOR
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from
Clayton Rose,
Aldo Sesia
Source: HBS Premier Case Collection
22 pages.
Release Date: 2 January 2013. Prod #: 313075-PDF-ENG
Barclays and the LIBOR scandal HBR case solution