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.....and shares plunge 17%
Barclays saw its market valuation plunge a breathtaking £4billion today as the global rate-fixing scandal threatened to push chief executive Bob Diamond towards the precipice. Barclays shares collapsed by 17 per cent at one point as investors assessed the damage to Diamond and the brand's reputation inflicted by the interest rate fiddle that earned a £290million fine crashing down on the banking giant last night. Speculation raged over how much board-level executives knew and Prime Minister David Cameron said the bank had 'some serious questions to answer', while Opposition leader Ed Miliband called for a criminal investigation.Mr Diamond waived his annual bonus for 2012 yesterday after the bank was fined by US and UK regulators for boosting its profits by manipulating Libor - the rates at which banks lend to each other, and which form the basis of loans, mortgages and an estimated $360trillion in investments....Read more here: Barclays LIBOR fine: Shares plunge 8% as PM adds to pressure on Bob Diamond
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The City regulator has ordered its biggest ever fine - a £290million penalty for Barclays - for manipulating the key lending rate of Libor. [read more]We explain why this interest rate is so important to your finances.
WHAT IS LIBOR?
It stands for the London Inter-Bank Offered Rate and is the interest banks charge to borrow from each other. Banks rely on this money to lend to customers and businesses. Its equivalent in Europe is called Euribor.
HOW DOES IT AFFECT ME, MY MORTGAGE AND MY SAVINGS?
The rate banks pay to raise money affects how much they charge on loans and mortgages. An increase in Libor can add hundreds of pounds to households’ annual mortgage repayments or a loan to a small business. This was seen with dramatic effect in the run up to the financial crisis, when Libor soared and lenders raised their rates. It is also used as the benchmark for trillions of pounds in complex financial investments. It also influences savings rates. If banks can borrow more cheaply from each other then they don't need to offer such good returns to savers.
WHAT DOES IT REFLECT?
Libor became a focus of attention in the credit crunch because it reflects the confidence that banks place in one another - hence one of the reasons banks would want to artificially influence it.......Read more here: Barclays scandal: How Libor affects mortgages and savings rates - and is customer compensation likely?