Libor scandal: Seven banks summoned in US probe

Barclays was fined for trying to manipulate the
Libor rates 

Seven banks, including HSBC and Royal Bank of Scotland, are to be questioned in the US for alleged manipulation of the Libor inter-bank lending rate.

The other banks receiving subpoenas by the New York attorney general are Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS.

Last month, Barclays was fined £290m by UK and US regulators for rigging Libor.

Some of the world's biggest banks have been embroiled in a number of scandals in recent months.

Following the Barclays fine, US regulators said they were investigating a number of other banks for potential Libor rigging.

A government-ordered review into Libor is currently being conducted by the managing director of the Financial Services Authority, Martin Wheatley.

The Wheatley review is examining how the Libor rate, the benchmark interest rate for trillions of financial contracts including some mortgages, is calculated and regulated.

The current Libor system is no longer a "viable option", Mr Wheatley said.

Libor is calculated using rates submitted by a group of leading banks who estimate how much it costs them to borrow in 10 currencies and 15 lengths of loans, ranging from overnight to 12 months.

There have been a series of allegations over the trading policies of banks in recent months.

-  BBC.co.uk