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Thursday 28 June 2012

Guess who benefits directly from the FSA fine on Barclays? Yes, its all the other banks...

The news that Barclays has been fined £290m by US and UK financial authorities for manipulating Libor rates is of course totally shocking.

But here's the thing.

The UK part of the fine, levied by the FSA, is some £59.5m. When this fine is paid, it will go directly to the FSA and will go towards their annual running costs.

The FSA is funded by a levy from the banks. So anything that goes towards defraying FSA costs just reduces the levy paid by all the other banks. So as a result of this manipulation - all the other banks are better off.

Plus ca change there

Here are a few other questions I don't have answers to (though I see others are now asking similar questions).

1. This manipulation took place between banks. Other financial institutions must have been involved. who are they and when will they be similarly fined.

2. Barclays may well have cost its own customers millions of pounds through this manipulation. Will they be compensating customers for this loss?

3. Does the sum fined reflect the profit made on the deals? If not, will there be further sanctions - or else Barclays will benefit from its actions. Should they not be returning all profits made as well as being fined?

4. If these transactions were illegal, will criminal charges be brought?

And that's just for starters...

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