Berkshire Bank, a New York lender
with 11 branches, sued 21 banks including Bank of America Corp.,
Barclays Plc (BARC) and Citigroup Inc. (C) (C) for damages over the alleged
manipulation of the London interbank offered rate.
Berkshire sought undisclosed compensation and punitive
damages and the right to represent other lenders in a group
lawsuit, or class action, in a July 25 filing in federal court
in Manhattan. The lender claims in the suit that Libor fraud
lowered interest payments it received.
Libor is the most widely used benchmark for setting values
on about $360 trillion in financial products, with the rate
being fixed each morning by the British Bankers’ Association.
Confidence in Libor has been shaken by Barclays’s admission that
it submitted false rates. Robert Diamond, who resigned as
London-based Barclays’s chief executive officer after the bank
was fined 290 million pounds ($456 million), told British
lawmakers this month that other banks also lowballed Libor
submissions.
“Tens, if not hundreds, of billions of dollars of loans
are originated or sold within this state each year with rates
tied to USD Libor,” New York-based Berkshire Bank said in its
complaint. The New York banks “were unable to collect the full
measure of interest income to which they were entitled,”
Berkshire said.
Berkshire seeks to represent all banks, savings-and-loan
institutions and credit unions that are based in New York or
have most of their operations in the state. There are several
hundred such institutions, the bank said.
Japanese Banks
Defendants in the suit also include the Japanese companies
Norinchukin Bank and Bank of Tokyo-Mitsubishi UFJ Ltd.
U.S. prosecutors are preparing to file charges later this
year against traders from several banks involved in a bid-
rigging scheme to manipulate Libor rates, according to a person
familiar with the case, who asked not to be identified because
the matter is confidential.
The Justice Department investigation of criminal activity
related to Libor is moving on a parallel course with civil
probes of the banks being conducted by the U.S. Commodity
Futures Trading Commission, the Securities and Exchange
Commission and U.K. regulators, including the Serious Fraud
Office.
So far, almost 20 traders have been identified in
regulatory filings, media reports or by the banks as having been
under investigation. Another 14 traders were mentioned, but not
identified by name, in the Barclays settlement.
The European Union promised stricter supervision of
interbank lending rates and said on July 25 that it may expand
antitrust probes of the manipulation.
The case is Berkshire Bank v. Bank of America Corp. (BAC) (BAC) 12-cv-
5723. U.S. District Court, Southern District of New York
(Manhattan).
To contact the reporter on this story:
Joe Schneider in Sydney at
jschneider5@bloomberg.net
To contact the editor responsible for this story:
Douglas Wong at
dwong19@bloomberg.net
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