Britain’s Lloyds Banking Group on Thursday said certain divisions of the state-rescued group had received subpoenas and requests for information as part of global probes into the Libor rate-rigging scandal.
LBG, which is 39.2-percent owned by the British government after a vast bailout, revealed the news as it also revealed narrowing net losses of £676 million ($1.05 billion, 861 million euros) in the first half.
The rate-rigging scandal hit the headlines last month when rival Barclays bank was fined £290 million by US and British regulators after admitting it tried to manipulate the Libor and Euribor interbank rates between 2005 and 2009.
LBG said on Thursday: “Certain members of the (LBG) group have received subpoenas and requests for information from certain government agencies and are co-operating with their investigations.
“In addition certain members of the group have been named as defendants in private lawsuits, including purported class action suits in the US with regard to the setting of Libor.
“It is currently not possible to predict the scope and ultimate outcome of the various regulatory investigations or private lawsuits, including the timing and scale of the potential impact of any investigations and private lawsuits on the group,” LBG added.
Libor is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent.
The interbank rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.
Separately on Thursday, LBG said it had narrowed its first half losses thanks to cost-cutting amid a restructuring of the group. The group had suffered a net loss of £2.305 billion in the first half of 2011.
“These half-year results show a continuation of what we delivered in the first quarter: significant balance sheet reshaping and another resilient performance against a backdrop of economic challenges and a lack of public confidence in our industry,” said LBG chief executive Antonio Horta-Osorio.
The results were published one week after LBG agreed to sell 632 branches at a loss to British financial services-to-food mutual business The Co-operative Group following an EU competition ruling.
The European Union had ordered LBG to offload a chunk of its branches in exchange for a huge state bailout after the 2008 global financial crisis.
LBG on Thursday added that it had set aside another £700 million to compensate clients over mis-sold payment protection insurance (PPI).
The group has now taken a total charge of £4.275 billion over the PPI scandal which erupted last year and which has heaped additional pressure on to Britain’s embattled banking sector amid the Libor affair and after huge bailouts.
Back in April 2011, British banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards.
PPI became controversial after it was revealed that many consumers had been sold it without understanding that the cost was being added to their loan repayments. Britain has since banned simultaneous sales of PPI and credit products.
