Norway Launches Interbank Rate Probe

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Norway Launches Interbank Rate Probe


Category: Accounting / Financial

In the latest in a series of worldwide probes into whether banks manipulated money  market rates such as Libor that have led to big fines for Barclays  and UBS, the Financial Services Authority in Oslo said it  was investigating volatile trading in Nibor, the Norwegian interbank offered rate.

The investigation started after the Norges Bank, the country’s central bank,  received emails from what it calls a “foreign bank” alleging market  manipulation, which it then passed on in August to the FSA.

Nordic countries had hitherto been looking at how to reform their interbank  rates – on which large volumes of loans to households and companies are based – but the Norwegian probe is the first investigation by a regulator.

Morten Baltzersen, director-general of the FSA, told the Financial Times that  no evidence of manipulation had been provided but that “some market participants  have from time to time asserted in general terms that volatile or unusual Nibor  fixings are clear indications of market abuse”.

Emails obtained by the newspaper Aftenposten from an unnamed foreign bank  point to the difference between various maturities of Nibor such as three, six  and nine months. “If this is not manipulation, I do not know what is,” one of  the emails is quoted as saying.

Nibor is set by six Nordic banks: DNB, Danske Bank, Handelsbanken, Nordea, SEB and Swedbank.

Finance Norway, the trade body that sets the rules on Nibor, said it had  taken the allegations seriously. “However, the conclusion was that the  variations in Nibor had been well within what can be explained by normal  factors,” said Jan Digranes, head of the banking and capital markets  department.

Nibor is calculated in a different way to other interbank rates, according to  Finance Norway, with banks submitting their levels based on US interest rates  they can receive as well as the difference in the exchange rate between the  Norwegian krona and US dollar.

Mr Digranes added that because of big swings in the currency because of  oil-related inflows and outflows Nibor often fluctuated more than other rates  and that following rate decisions from the central bank volatility was higher  with occasionally different maturities moving in opposite directions.

Shortly before Christmas, the Norwegian government asked the FSA to look into  reforming the way Nibor was calculated. Sweden decided last week that the  Swedish Bankers’ Association should take over responsibility for setting  so-called Stibor, going against a trend of taking power away from industry  groups. Denmark is also looking into reform of its local rate despite finding no  evidence of manipulation.

Source: The Financial Times

Published: July 13, 2024