Citigroup Agrees to Settle Yen Libor; Others Expected to Follow

Citigroup Agrees to Settle Yen Libor; Others Expected to Follow

Citigroup agreed to pay millions towards the settlement of Libor scandal; lawyers call the accord an “ice breaker”

Citigroup Agrees to Settle Yen Libor; Others Expected to Follow

By Abdul Wasay on Feb 3, 2016 at 7:43 am EST

Recently banks have been under the spotlight over various litigation charges worldwide. Citigroup Inc. (NYSE:C) agreed to pay settlement charges of $23 million for to settle allegations that it rigged the Yen Libor. There are several other banks, which operate worldwide, that had been sued for the same case.

Sonterra Capital Master Fund, California State Teacher’s Retirement System, and Hayman Capital Management filed the suit in July 2014. These investors claimed 21 banks and three brokerage entities are responsible for manipulating and taking unfair benefits from the “Yen Libor, Euroyen Tibor, and Euroyen Tibor futures contract” rate-fixing, according to Bloomberg.

Citigroup is the first to have agreed to settle the charges in August 2015. The delay in settlement occurred due to absence of court’s approval. Just recently, Citigroup filed settlement papers in the US District Court in Manhattan. Whereas, in August 2015 Citigroup’s former trader Tom Hayes was convicted for misconduct and has been serving imprisonment of 11 years.

Along with the earnings released for the fourth quarter of 2015, the bank highlighted reduced expenses. Citicorp revenue is up by 3% while operating expenses have risen by 2%. Moreover, the Citicorp unit improved its efficiency from 65% to 57%. Expenses declined on the back of lower legal and restructuring costs from 900 basis points to 200 basis points of revenue. The management expects sequential revenue growth with improved efficient operations, and benefit from scale in the current quarter. However, the settlement charge of $23 million agreed to be paid to the plaintiff could build pressure on expenses and drive sluggish earnings in the current quarter.

Vincent Briganti, the plaintiff’s lawyer, stated that Citigroup’s agility to settle claims reflects its limited involvement in rigging Yen Libor rates. He added that this agreement could serve as an “ice breaker” to make remaining defendants settle the charges. Among brokerage firms, RP Martin Holdings Ltd agreed to settle with the plaintiff. However, in January RP Martin with other two brokerage firms, Tullet Prebon Group and ICAP, were acquitted from the case in London. Other defendant includes UBS Group AG, Deutsche Bank, HSBC Holdings Plc., JPMorgan Chase & Co., Barclays Plc., Royal Bank of Scotland Plc., along with several Japanese banks.

Editing by Mobin Nasir; Graphics by Rashid Rehman

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