Banks Secure Major Win as US Judge Rejects Antitrust Claims in Libor Lawsuits

Major International banks have secured a significant legal victory as a US judge dismissed antitrust claims in private lawsuits that accused the lenders of manipulating the London interbank offered rate (Libor).

A body of plaintiffs, including investors and local governments, had accused 16 of the biggest global lenders of conspiring to rig the global benchmark rate, which is crucial to a number of financial products.

The banks included Royal Bank of Scotland, Barclays, UBS, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, JPMorgan Chase & Co, WestLB AG and Bank of America Corp. The claims were considered a major legal concern for these lenders, on top of regulatory probes in the UK, Europe and the US.

But in an unprecedented 161-page ruling that proved to be a major setback to the plaintiffs, US District Judge Naomi Reice Buchwald dismissed claims that the banks broke antitrust rules, while allowing some of the commodity-rigging claims to go on to trial.

"We recognise that it might be unexpected that we are dismissing a substantial portion of plaintiffs' claims, given that several of the defendants here have already paid penalties to government regulatory agencies reaching into the billions of dollars," Buchwald wrote.

"However, these results are not as incongruous as they might seem. Under the statutes invoked here, there are many requirements that private plaintiffs must satisfy, but which government agencies need not".

Libor, which is set daily by a panel of global banks in London, is a key measure in fixing interest rates for financial instruments worth trillions of dollars. It determines the rate at which banks lend among themselves for a range of durations.

Investigations into the manipulation of these rates have already resulted in settlements from some of the banks. Barclays has agreed to pay £290m ($441m/€343m) while Royal Bank of Scotland consented to shell out $612m to the US and the UK regulators. UBS agreed to pay 1.4bn Swiss francs ($1.47bn).

The latest ruling could be a significant boost for the banks as most of them are expected to opt for settlement claims in the coming months. It could also prompt a rethink of estimates on potential Libor damages.