In a research note published Tuesday, the investment firm analysts speculate on the potential liability of big banks that help determine the key interest rate in the wake of Barclays' $450 million settlement of charges that its employees manipulated the Libor rate, keeping it artificially low. A number of other banks have disclosed that they, too, are under investigation.
Bank of America has not been identified as being under investigation for falsifying Libor submissions, but the Charlotte bank is a defendant in a civil suit brought by Charles Schwab making similar allegations.
KBW's liability estimates are based on the dollar value of derivatives each bank holds that are tied to Libor.
JPMorgan Chase could be on the hook for $4.8 billion, the analysts estimate, and Citigroup could pay $3.1 billion. The industry as a whole could make $35 billion in settlements.
The analysts pointed out, however, that the burden of proof against these banks will be difficult to meet, and say it will likely be tied up in the legal system for five to eight years.
No comments:
Post a Comment