LONDON - Twenty of the world’s largest banks were censored by Singapore authorities on Friday over the attempted manipulation of local benchmark interest rates that are part of a larger rate-rigging scandal still being investigated by global regulators.
The financial institutions, including Bank of America and JPMorgan Chase, were found to have insufficient risk management and internal controls, which allowed some of their traders to attempt to alter rates including, the Singapore interbank offered rate, or Sibor.
The latest revelations follow a series of multi-million-dollar fines against UBS, Barclays and the Royal Bank of Scotland for the manipulation of the London interbank offered rate, or Libor, which underpins trillions of dollars of mortgages, business loans and other global financial products.
As part of its investigation, the Monetary Authority of Singapore said 133 traders at firms like Credit Suisse, Citigroup and ING tried to influence the local benchmark rate for their own financial gain over a five-year period starting in 2007.
Around three-quarters of the implicated traders have left the banks involved, while the other bankers face internal disciplinary procedures, according to a statement from the Singaporean financial regulator.
While none of the 20 global banks were fined, the financial institutions must hold a combined $9.7 billion in extra reserves with Monetary Authority of Singapore at zero percent interest for one year while they carry out internal changes.
Barclays, ING and R.B.S. must each hold up to an additional $960 million with local authorities, while Bank of America will be forced to keep an extra $640 million with the regulator in Singapore. The amount of capital was dependent on the severity of the attempted manipulation.
Like other global regulators, the Singapore authorities also said they planned to make it a criminal offence to manipulate benchmark rates. Under current local legislation, the attempted manipulation does not constitute a criminal offence.
As the rate-rigging investigations enter their fifth year, regulators continue to look into allegations that traders at some of the world’s largest banks altered key benchmark rates for financial gain.
While the Libor inquiries have centered initially on European banks, a number of U.S. financial institutions also remain in the sights of regulators at the United States Commodity Futures Trading Commission and at the Financial Conduct Authority of Britain.
