The Barclays debacle

[Dave A]

Obviously Barclays will have many claims against them from clients who have lost on the deliberate miscalculation of LIBOR based interest.

That's an interesting interpretation of what they did. My understanding is they understated their interest spread on LIBOR loans when reporting to the Bank of England / Treasury.

I don't think ABSA is involved, at least not the way you suggest. The one possible consequence that was raised is Barclays might have to sell off ABSA to raise cash...

[Blurock]

That's an interesting interpretation of what they did. My understanding is they understated their interest spread on LIBOR loans when reporting to the Bank of England / Treasury.

The "spread" is bank jargon or terminology. It is actually the difference between the interest rate set by the Bank of England and the LIBOR Rate. By setting the rate lower, Barclays could make more profit on transactions. Much like the "PIPS" taken on forex deals. If you are a regular forex trader, you would probably be able to negotiate a better forex rate than say the uninformed occasional traveller.

Barclays has admitted that some of its traders attempted to manipulate the setting of the London interbank offered rate (Libor), which is used worldwide as a benchmark for setting prices on about $350 trillion of derivatives and other financial products. Reuters

It appears as if this scandal has blown over to the US and more than a dozen banks, including Citibank, HSBC and UBS are being probed. The banks are being accused of colluding to manipulate the global benchmark LIBOR rate that sets prices on USD350 trillion of derivatives and other financial products.

Is ABSA, as a subsidiary of Barclays, squeaky clean? Any one involved in trading in financial instruments should do their homework and double check to see if they had been quoted the correct rates on financial transactions.