Libor probe shakes up Citi, Deutsche Bank

Citigroup Inc, Deutsche Bank AG, Bank of America Corp and JPMorgan Chase & Co had been asked by US regulators to make employees available to testify as witnesses in a probe of potential interest-rate manipulation, two people briefed on the plans said.

The banks, members of the panel that sets the interbank offered rate known as Libor, were asked to appear voluntarily for the interviews in London in April with the UK Financial Services Authority, the people said, speaking on condition of anonymity as the proceedings are confidential. The people didn’t say who would testify from the banks.

The US Department of Justice, Securities and Exchange Commission and Commodity Futures Trading Commission may be investigating whether banks colluded to artificially reduce Libor, another person with knowledge of the probe said. UK regulators often cooperate with their US counterparts in enforcement probes.

Libor rates, a benchmark for more than $350 trillion of financial products worldwide, are set daily by the British Bankers’ Association based on data from banks reflecting how much it would cost them to borrow for various periods of time and in different currencies. The Bank for International Settlements questioned whether Libor rates were accurate during the credit crisis, and some analysts accused banks of concealing the difficulty they were having in borrowing money.

Spokespeople from Frankfurt-based Deutsche Bank, Germany’s biggest bank; Charlotte, North Carolina-based Bank of America, the largest US lender by assets; New York-based Citigroup, the US bank that received the biggest taxpayer bailout; and New York-based JPMorgan, the second biggest US lender by assets, declined to comment. The investigation came to light last week after UBS AG, Switzerland’s biggest bank, said it received subpoenas from US and Japanese regulators. UBS said it was conducting an internal review.