Lloyds Banking Group Plc, bailed out by British taxpayers during the financial crisis, will pay 218 million pounds ($370 million) in fines to U.K. and U.S. regulators after manipulating benchmark interest rates.
The lender will pay $105 million to the Commodity Futures Trading Commission, $86 million to the Department of Justice and 105 million pounds to Britain's Financial Conduct Authority, according to a statement today. Lloyds has also paid a further 7.8 million pounds in compensation to the Bank of England after the actions of its traders reduced the fees the central bank received from one of its emergency-rescue packages.
"The actions of these individuals between 2006 and 2009 are completely unacceptable," Lloyds Chairman Norman Blackwell said in a statement. "Their behavior involved a gross breach of trust and we condemn it without reservation."
Prosecutors and regulators around the world are investigating firms to determine how traders at more than a dozen firms colluded to rig Libor and related benchmarks to profit on their own derivatives deals. At least nine financial firms have been fined about $6 billion for manipulating Libor, the benchmark interest rate for more than $300 trillion of securities worldwide.
Lloyds's penalty is less than the 290 million pounds Barclays Plc paid in June 2012 when the London-based lender became the first to settle Libor-manipulation claims. Chief Executive Officer Robert Diamond was forced to resign in the aftermath of the settlement. UBS AG, Switzerland's biggest bank, has paid the most, settling with U.S., U.K. and Swiss regulators in 2012 at the cost of $1.5 billion.
Lloyds was unchanged at 74.81 pence as of 2:28 p.m. in London trading today.
The lender paid redress to the Bank of England after four traders manipulated the BBA Sterling Repo Rate between April 2008 and 2009, according to Lloyds. Their actions reduced the fees banks would have to pay under the Special Liquidity Scheme, put in place to help British banks through the financial crisis, according to a BOE statement.
"Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved," Mark Carney, the governor of the Bank of England, said in a letter to Lloyds released today.
Twelve individuals, four of whom were managers, were either involved in or aware of requests to manipulate sterling, dollar and yen Libor, according to the FCA. They were motivated by the fact the money market desk's performance helped to determine their bonuses, according to the U.K. regulator.
"There was a culture on the money market desks of seeking to take a financial advantage wherever possible," the CFTC said, adding the bank's attempts to rig the rate were at times successful.
Manipulation of Yen Libor was compared with British supermarket chain Tesco Plc's "every little helps" marketing slogan, according to a transcript released by the FCA.
"Every little helps... It's like Tescos," a Lloyds trader wrote on July 19, 2007, to a manager. "Absolutely, every little helps," said the manager, whose identity was not disclosed in the transcript.
Lloyds received a 20 billion-pound bailout during the financial crisis. The British government has since been able to cut its stake to 25 percent.
Antonio Horta-Osorio's efforts to return the lender to full private ownership are being hampered by isssues of past misconduct including the mis-selling of insurance on consumer loans. The bank is slated to report first-half earnings on July 31.