Lloyds nears deal with regulators on Libor fines

Lloyds Banking Group is believed to be nearing a settlement with regulators in the US and UK over alleged Libor rigging, making the taxpayer-backed lender the latest in a long line of banks to face heavy fines.

An agreement with the Financial Conduct Authority (FCA) and the US Commodities and Futures Trading Commission (CFTC) is expected within weeks, and will come just over two years after the Libor scandal erupted.

Royal Bank of Scotland (RBS) and Barclays have already paid fines worth hundreds of millions of pounds to regulators in the UK, US and EU over manipulation of the benchmark, while UBS, Deutsche Bank, Citigroup, JP Morgan and the brokers RP Martin and ICAP have also been fined.

The extent of Lloyds’ involvement in the Libor scandal is unclear, although the bank, 25pc owned by the UK taxpayer after its 2008 bailout, has been investigated alongside others in the US.

A spokesman for the bank said: “As we have disclosed, Lloyds Banking Group continues to receive requests for information from a number of government agencies with regard to their investigations into interbank offered rates (including LIBOR).

“We are co-operating with those investigations. If required the group would update the market as appropriate.”

Collectively, banks have paid out billions in fines over Libor – the interest rate benchmark set by banks once a day in London. The benchmark was allegedly manipulated during the financial crisis to make banks appear healthier than they actually were.

The CFTC has levied the lion’s share of fines. Barclays’ £290m settlement in June 2012 was made up of £230m from the US regulator, and £60m from the FCA’s predecessor, the Financial Services Authority (FSA).

In February last year, RBS reached a £390m settlement with prosecutors, £90m of which went to the FSA. It was then fined a further €390m (£309m) by EU regulators in December.

The developments were first reported by the Wall Street Journal.