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Barclays Bank Could Be Hit With Another $100 Million Fine

Barclays BankBarclays Bank Plc and a number of other U.K banks such as the Royal Bank of Scotland and Standard Chartered have been accused of manipulating foreign exchange transfer rates and tampering with the (London Interbank Offered Rate) LIBOR rate. All these banks admitted to the charges which were raised by the New York Department of Financial Services (DFS) and were asked to pay hefty fines.

LIBOR is used by banks to primarily set exchange rates on hundreds of billions of dollars worth of final transactions covering a number of segments ranging from credit cards, mortgages and student loans. Banks depend on LIBOR to decide the cost of borrowing from one party to the other.

Barclays Bank Plc might have to pay yet another fine of close to $100 million due to another irregularity that DFS discovered. Barclays has been accused of following a practice known as the ‘last look’ where the bank would suddenly back out of trade deals that was not in favor of the bank. The bank would back out at the last minute on a consistent basis and thereby violated banking guidelines were banks are cautioned against abusing the ‘last look’ strategy of rejecting trade deals on foreign exchange platforms.

The first fine that Barclays admitted to pay was set at $650 million and was imposed due to the violations involving euros and U.S. dollars on the foreign exchange spot market. This new fine of $100 million is a smaller amount because the investigation revealed that the violations were based on a small number of trade transactions.

In a statement, Hilary Scherrer, a partner at Hausfeld LLP which represented the plaintiffs said

This is a very good settlement for the class. It is an icebreaker that could open up this litigation to future settlements.

Barclays officials have so far not made any comment about the possibility of another $100 million fine.

This new fine will put even more pressure on Barclay’s senior leadership team who will have to look at new ways to raise money to pay yet another fine. The Bank had earlier announced a number of changes to its organization structure including downsize thousands of jobs in an effort to save costs and help reduce the burden on the bank’s financial reserves. The bank is expected to cut as many as 30,000 jobs before the end of 2017.