Citigroup halts contributing to two Malaysian bench mark rates
Northern, WI 03/06/2013 (gdpinsider) – Citigroup Inc. (NYSE:C), third-biggest US bank, halted contributing to two Malaysian bench mark rates, sources familiar with the matter disclosed.
The bank’s compliance for the ringgit spot reference rate against the dollar and the Malaysian ringgit interest rate swaps were stopped a week earlier, according to the sources who do not want to be identified since they do not have authority to speak publicly on the matter.
The withdrawal of Citigroup was followed by similar sort of reactions from other global banking giants such as HSBC Holdings Plc and UBS AG as regulators are thinking about penalty and legal recourse against rigging scandals.
Some of the biggest names in the financial world such as Barclays Plc, UBS and Royal Bank of Scotland Group Plc have already been imposed fine of about $2.5 billion in response to manipulation of London Interbank Offered Rates.
However, Hong Kong-based spokesman for Citigroup James Griffiths did not comment on Citigroup’s exit. The US banking giant continues to contribute to the Kuala Lumpur Interbank Offered Rate, as per the data compiled by Bloomberg.
Traders use the ringgit swap and exchange rates to hedge against interest rate and currency trading and speculate on their direction. Barring Citigroup, 11 banks are still contributing to the rates daily, as data suggest.
In September 2012, Citigroup on the pretext of a lack of trading between banks in the region offered to withdraw its name from the panel of lenders which decide the euro interbank offered rate. After that Dutch savings bank Rabobank International left the panel in January this year and Deutsche Bank AG in February also wished to end involvement.
The British Bankers’ Association (BBA) is going to stop quoting rates in Australian, New Zealand and Canadian dollars as well as Danish and Swedish currencies by June this year.
BBA is also cutting currencies and maturities incorporated in the benchmark rate keeping in view inadequate trading data to estimate borrowing costs precisely.
The shares of Citigroup Inc. (NYSE:C) were up by 1.08% and currently trading at $44.05