Case study Barclays and the LIBOR Scandal Example | Topics and Well Written Essays - 1250 words

Barclays and the LIBOR Scandal - Case Study Example m 2007 to 2009, Barclays was seen to submit rates which were below the presumed cost of borrowing, so as to be able to manage the market’s sensitivity relating to financial feasibility. The company’s goal was to keep submission lower than other competing firms. It was seen that Barclays could make huge sums of profits, even by the slightest manipulation of the LIBOR rates (Rose and Sesia 1). It was quite clear that the bank’s employees had undertaken such activities to earn higher profits and to limit the losses which arise from the derivatives trading. Barclay’s traders were trying to consider their own profit motives and earn dishonest profits. The dishonest LIBOR submissions had led towards dampening market speculations. Although the bank was able to make adequate profits, it could not sustain the manipulation process for long. It can be stated that the benefits of such manipulation was very limited and short-lived. However, the negative impacts of the Barclays LIBOR manipulation were quite extensive. The submitted rates had a wide felt negative impact in the derivatives market. The firm had lost the trust of customers and traders during the crisis period, and had also created negative waves in the media regarding its viability in the market. Post the Barclays scandal, 20 more banks were questioned and vividly examined by regulators. In the whole process of LIBOR manipulation, since interbank rates were manipulated, derivative transactions and banks lending to investors had also been impacted in a negative manner (Monticini and Thornton 345). Bob Diamond, the former CEO of Barclays had blamed a small group of employees for the violation of the LIBOR rates. Bob had denied any personal wrongdoing against the allegations made in respect of rigging the LIBOR and limiting the market and media speculations. Bob also went to the extent of stating that Barclays was more honest in submitting its LIBOR rates as compared to other banks (Surowiecki 25). He also