Discussion
Slaav said:
djstevec said:
My apologies, again hard to get irony in a written msg unless blindingly obvious (for me anyway!)
As its been stated its even rarer to find UK mortgages linked to the USD, EUR or Yen LIBOR rates that the traders were manipulating up or down.
And of those attempts to move the rates, for USD LIBOR, 89% of the time Barcs were equal to (or outside of) the 4th highest or lowest rates, so would have made no difference to the rates on that day.
Think you may need to think this through again???As its been stated its even rarer to find UK mortgages linked to the USD, EUR or Yen LIBOR rates that the traders were manipulating up or down.
And of those attempts to move the rates, for USD LIBOR, 89% of the time Barcs were equal to (or outside of) the 4th highest or lowest rates, so would have made no difference to the rates on that day.
If (eg) Barcap were outside at (eg) 2.5 (on the upside) then it could mean that a 2.45% is now within the average and is taken into account. If Barcap was 'true' at 2.4%, then the 2.45% is in the outside 4 and discarded?
Or have I got that wrong? The only way that they could truly be totally ignored is if they were so far outside that they really make no difference. and that would be counter intuitive? Slightly circular argument but if they are on or near the fringes, then they may (note MAY) genuinely make a difference. If they are way within and remain within, they make little difference as the spread is so small that the mean is fairly true?
Or is my bottle of red taking over???
I "may" have had one myself!
But...
Yes you're right in the sense that on the upside, if Barcs had over stated their submission (due to trader requests), if originally there were inside the centre rates, then they were on the high outside of the 8 centrist rates, the overall rate in effect would be pushed down. Their rate only had to be 1bp above or below the 8 centrist banks for Barcs rate to be discarded. And your assumption only holds true if all other banks were accurately submitting rates.
However, during that time, the traders were in the main, looking to adjust USD, EUR or Yen rates, so in response to the OP's query, in reality the effect to GBP mortgage or loan holders would be almost impossible to calculate (unless you start back calculating the FX exposure by each bank and the transactions used to cover that exposure, which in the case of h Euro would mean further cross checking to EURIBOR rate manipulation) or zero.
The figures I quoted were directly from the FSA report, so out of 173 (again Ive had a drink) requests to adjust USD LIBOR up or down, 66% of the adjusted rates submitted to the BBA were not within the centrist range of 8 rates either high or low. The other 23% were equal to another banks LIBOR rate, but the report does not say if Barcs rate was on the high side or low side of the 8 centrist rates, so dependent upon whether the request for that was a high or low submission, the rate was manipulated or not.
Now if we move forward to the time of senior management intervention, Barcs LIBOR rates (possibly across the board as no currency or rate period are mentioned in the report) were still in the main, higher than 8 other centrist panel banks, the overall effect would have been to push the calculated rate lower.
Again to "average Joe" it wouldn't result in much of an issue, however to large pension funds, hedge funds etc, who were possibly hedging long positions with short derivs such as CFD's, this could have had a negative effect on the LIBID cash interest rates they would have received.
Edited by djstevec on Thursday 5th July 13:27
http://pic.twitter.com/dGZqmKNW Posted on Twitter by Robert Peston. Not sure if a genuine ad or not?
munky said:
in what form, fines? Whose estimation?
Nomura apparently.How can anyone have any form of sensible guess at this stage??
It is still unclear how many banks were involved, how frequently the rate was manipulated, whether the attempts to manipulate the rate were successful and if so by how much etc...
interesting. There are 5 other banks under investigation, so that's £844m each after subtracting the £280m of Barclays (including the US fines). So either Barclays got off lightly and are perhaps the least to blame of the 6.. or the estimate includes civil lawsuits. But, seeing as the injured parties in LIBOR being set too low (if indeed it was affected at all) are other banks, then the net cost of the lawsuits will be zero. Except for the legal fees of course. Which won't be cheap, but even Zod doesn't charge £4.5bn 
Of course, any supposed derivatives losses will be matched with equal gains somewhere else so again these net to zero.
It may not be just banks bringing lawsuits mind you, could be hedge funds as well.
Of course, any supposed derivatives losses will be matched with equal gains somewhere else so again these net to zero.It may not be just banks bringing lawsuits mind you, could be hedge funds as well.
turbobloke said:
munky said:
sidicks said:
nigel_bytes said:
Repost from 10:58............There was also a song doing the rounds.. Sign On You Crazy Diamond.
Meanwhile coincidentally we had Barclays management (what's left of them) in our building today for a meeting with our equity analysts & sales. Which was interesting. They said the 31st floor at Barclays wasn't a fun place to be at the moment. Which I can well believe.
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