Several small banks representing state and local governments have filed lawsuits against banks accused of manipulating Libor, which could cost banks involved in the investigation as much as $88 billion.
The plaintiffs, including New York’s Berkshire Bank, said that they missed out on lending revenue due to manipulation of the London interbank offered rate, commonly referred to as Libor. Libor is a key interest rate used to price various financial products.
Sixteen banks are under investigation in the scandal, including Bank of America, Bank of Tokyo-Mitsubishi, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Lloyds, HSBC, HBOS, JPMorgan, Norinchuckin, Rabobank, Royal Bank of Canada, Royal Bank of Scotland, UBS and West LB, Huffington Post reports.
A report by Australian firm Macquarie Research suggested that the banks being sued may have to pay out $88 billion in settlements and penalties resulting from $176 billion in investor losses, though other lower estimates project costs of less than $8 billion.
Barclays recently agreed to a $453 million settlement with U.S. and British authorities regarding its participation in the Libor scandal. The bank admitted in 2008 to submitting artificially low rates as part of an attempt to manipulate Libor, according to Huffington Post.
The next settlement could come from RBS.