Lloyds under attack on claims it 'benefited' through offshore fund

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Lloyds Bank ran an offshore prop-trading fund which may have profited from the manipulation of Libor in the run-up to the financial crisis, new legal documents allege.

The bank used a fund, Japanese Trading Company (JTC), to buy and sell Japanese assets such as debt issued by the Bank of Japan using Lloyds’ own, rather than depositors’, money.

Senior staff at the fund then told Lloyds rate-setters to fiddle interest rates on Japanese yen “to benefit Lloyds”, legal filings allege. 

JTC, thought to have been registered in Jersey, has never been publicly disclosed by regulators or the bank, which is 9%-owed by the taxpayer.

The fresh allegations are contained in a civil lawsuit by a care-home operator Wingate, controlled by Wolverhampton businessman Gary Hartland.

Wingate is suing Lloyds over allegations it was mis-sold interest-rate hedging, a claim Lloyds denies.

Wingate said there was a “strong implication” Libor was rigged by bank rate-setters to benefit JTC and Lloyds. 

The bank is battling an application by Wingate to disclose further information about JTC, saying the fund is not relevant to the case.

Lloyds paid regulators in the US and UK a £218 million fine in 2014 over yen, US dollar and sterling interest-rate rigging.

Lloyds said JTC was part of the group’s “funding and foreign-exchange hedging” and a “common structure used by many UK Groups at the time”. 

Hartland previously sued Barclays over allegations of mis-sold interest-rate swaps.

He discovered Barclays had a prop-trading fund called Ricardo, which he alleged benefited from Libor manipulation. That claim settled before trial.

Source Article from http://www.standard.co.uk/business/lloyds-under-attack-on-claims-it-benefited-through-offshore-fund-a3393721.html

November 12, 2016 |
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