Libor is set every day in London at 11 a.m., using submissions by a consortium of banks that report the rate they are paying to borrow. Roughly $10 trillion in loans and $350 trillion in derivatives are tied to Libor, according to The Wall Street Journal calculations.
Friday's Swiss probe is an added trouble to UBS, the Swiss bank that faced a U.S. tax probe and which is still recovering from multi-billion dollar losses from a rogue trader. In July, the DoJ granted immunity to UBS in its Libor probe.
Bloomberg reports that Deutsche Bank and RBS were raided by European Commission competition authorities over possible collusion in setting the European interbank offered rate, or euribor, in October. EU Competition Commissioner Joaquin Almunia said that EU regulators are increasing their antitrust focus on how banks operate in wholesale financial markets. "Preserving competition in this domain is of utmost importance and we will live up to our responsibilities in this regard," said Almunia in January.No formal allegations or charges have been brought against any banks in any probes into the overnight rates. "We are taking these investigations very seriously and we are fully cooperting with authorities," a UBS spokesperson said. "We can confirm that the Swiss competition commission COMCO has informed us about this investigation. We will cooperate fully with the authorities on this matter," a Credit Suisse spokesman said in an emailed statement. -- Written by Antoine Gara in New York
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