HSBC Set to Pay $100 mln As Settlement for Libor Rigging Lawsuit in the US

Photo by Håkan Dahlström from Flickr

HSBC Holdings Plc has agreed to pay $100 million as a settlement to end private litigation in the United States that is accusing it of colluding to manipulate the Libor benchmark interest rate. It has now become the fourth major bank to pay a settlement.

On Thursday, the preliminary agreement with “over-the-counter” investors that directly transacted with banks on a panel to determine the Libor or the London Interbank Offered Rate, was disclosed in filings with the U.S. District Court that is based in Manhattan.

Approval from the court is a requirement.

So far, the settlements with the OTC investors amounted to $590 million and included $130 million with Citigroup Inc, $240 million with Deutsche Bank AG, and $120 million with Barclays Plc.

Court papers reveal that HSBC denied any wrongdoing. However, it agreed to the settlement to avoid the costs, distraction, and risks of litigation.

A spokesperson for the company was not immediately available to comment on the matter.

Banks make use of the Libor to set the rates on hundreds of trillions of dollars of loan transactions such as mortgages, credit cards, and student loans. They also use the Libor to determine the costs of borrowing from each other.

Investors which include the Yale University in Connecticut and city of Baltimore had accused 16 banks of plotting to manipulate Libor. The private litigation started way back in 2011.

Banks have paid approximately $9 billion to settle Libor-rigging investigations worldwide.

Last July, the head of the Financial Conduct Authority in the United Kindom said that the regulator would phase out Libor by the end of 2021, noting a lack of data to be able to underpin it.