Barclays rigged Libor for years — and taught the world how to do it

Barclays is one of Britain's oldest banks, founded in 1690, and one of the world's largest financial institutions. For years, its traders manipulated the London Interbank Offered Rate (Libor) — the benchmark interest rate that underpins over $350 trillion in mortgages, loans, and derivatives globally. Barclays traders submitted false rates to benefit their derivatives positions, and during the 2008 financial crisis, the bank deliberately submitted lower rates to appear healthier than it really was.

The manipulation was brazen and frequent. Emails showed traders directly asking the employees responsible for rate submissions to 'keep the libor fixing at 5.39' because 'we got a big position in 3m libor.' A Barclays employee told the New York Fed: 'We know that we're not posting an honest Libor, and yet we are doing it, because if we didn't do it, it draws unwanted attention on ourselves.' On June 27, 2012, Barclays settled with US and UK regulators for a combined $450M (£290M) — the first bank to settle in what became the largest financial benchmark scandal in history.

The fallout was immediate. CEO Bob Diamond and Chairman Marcus Agius resigned within a week. Barclays' share price dropped sharply. The scandal triggered global investigations of over 20 banks, resulting in more than $9 billion in total fines. The Wheatley Review led to fundamental reform of Libor, including criminal sanctions for manipulation. Tom Hayes, a former trader at UBS and Citigroup, was convicted by a UK jury and sentenced to 14 years (reduced to 11 on appeal). Libor was phased out by end-2021, replaced by reformed benchmarks that base submissions on actual transactions.