US regulators sue 16 world's largest banks

The banks are accused of colluding to suppress interest rates

The Federal Deposit Insurance Corporation sued 16 of the world's largest banks on Friday, accusing them of colluding to suppress interest rates.

The lawsuit, filed in the federal district court in New York, was the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate.

The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

"The closed banks' losses flowed directly from, among other things, the harm to competition caused by the fraud and collusion alleged in the complaint," the FDIC said in the lawsuit.

The banks named as defendants include Bank of America Corp , Barclays PLC, Citigroup Inc , Credit Suisse Group AG , Deutsche Bank AG , HSBC Holdings PLC , JPMorgan Chase & Co , the Royal Bank of Scotland Group PLC and UBS AG .

The lawsuit also named the British Bankers' Association, the U.K. trade organization that during the period at issue administered Libor.

Greg Hernandez, a spokesman for the FDIC, declined comment. Representatives for the some of the banks either declined comment or did not immediately respond to requests for comment.

Regulators in the United States, Europe and Asia have been probing many banks for manipulating Libor and other rate benchmarks.

Libor, which is the average rate that a panel of banks say they can borrow unsecured funds, has become a key rate globally, underpinning more than $550 trillion in financial products, from home loans to derivatives.

The Libor and related Euribor investigations have so far seen U.S. and European regulators fine 10 banks and brokerages for $6 billion and bring charges against 13 individuals.

The FDIC lawsuit joins an array of civil actions filed in the wake of the scandal.

The complaint asserts claims against the banks including breach of contract, unjust enrichment, fraud, conspiracy and negligent misrepresentation.

It seeks unspecified damages in order to recover for losses sustained by the closed banks that the regulator seized.

Other defendants in the lawsuit include Rabobank, Lloyds Banking Group plc , Societe Generale , Norinchukin Bank , Royal Bank of Canada , Bank of Tokyo-Mitsubishi UFJ and WestLB AG.

The case is Federal Deposit Insurance Corporation, et al, v. Bank of America Corp, et al, U.S. District Court, Southern District of New York, No. 14-1757.