Throw crooked bankers in jail: Clamour grows as Bank of England chief says Lloyds traders 'clearly broke the law'

Mark Carney says Lloyds staff involved may be guilty of 'criminal conduct'

Bank ripped off Treasury during financial crisis with creditworthiness lies

It gained access to tens of billions from Government at favourable rates

MP says public don't understand why rogue bankers haven't been jailed

Bank of England governor Mark Carney has said Lloyds staff involved in an astonishing scam to defraud taxpayers could be guilty of ‘criminal conduct’.

Lloyds was yesterday discovered to have ripped off the Treasury at the height of the financial crisis by lying about its creditworthiness.

This allowed the state-backed bank to gain access to tens of billions from a Government ‘lifeline’ scheme at favourable rates – but left taxpayers out of pocket.

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Anger: Details of a letter sent by Bank of England governor Mark Carney (pictured) to the Lloyds chairman revealed the governor's fury

Between April 2008 and September 2009, four traders cut £7.8million off the fees Lloyds paid to the Treasury by manipulating the ‘repo rate’ which set the level of the fee.

Yesterday – as Lloyds was fined £218million and a senior MP said the public did not understand why rogue bankers had not been jailed – details of a letter sent by Mr Carney to the Lloyds chairman revealed the governor’s fury.

He wrote: ‘Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved.’

He added that ‘in view of the seriousness of this matter’, the Bank will consider pursuing further action against Lloyds and the individuals involved. Lloyds also faces a possible investigation by the Serious Fraud Office.

Lloyds chairman Lord Blackwell replied: ‘This was truly shocking conduct, undertaken when the bank was on a lifeline of public support.’



Last night Tory MP Mark Garnier, who sits on the Treasury Select Committee, said: ‘The public doesn’t understand why bankers have not gone to prison.



Ripped off the Treasury: Lloyds was fined £218million and a senior MP said the public did not understand why rogue bankers had not been jailed

‘This is, on the face of it, a deliberate action to defraud the taxpayer by a bank that we bailed out.’



His Tory colleague Andrew Tyrie, chairman of the committee, said: ‘The banks were manipulating Libor [the inter-bank lending rate] and the repo rate, in the process deceiving the Bank of England in its operation of a taxpayer-backed support scheme.’ He called it ‘appalling behaviour’.

EVERY LITTLE HELPS! HOW THE BANKERS BOASTED ABOUT FIXING LENDING RATE July 27, 2006

‘Morning skip… my little [racial slur removed] friend in Toyko wants a high 1m [month] fix from me today… am going to set .37 [percentage] – just for your info sir.’

Employee from Dutch firm Rabobank.

‘That suits mate as got some month end fixings so happy to ablige [sic]…rubbery jubbery… :-O’

Lloyds employee.

July 28, 2006

‘Morning skipper… will be setting an obscenely high 1m again today… poss 38 just fyi [for your info].’ Rabobank employee to Lloyds employee.

‘Oh dear… my poor customers… hehehe!!’

Lloyds employee’s response.

July 19, 2007

‘Every little helps… It’s like Tescos.’

Email from Lloyds trader to his manager about a request to manipulate Libor.

‘Absolutely, every little helps.’

Reply from Lloyds manager.

August 17, 2007

‘I ain’t got any 3s [3 months’ sterling] fixings mate. I’ve got no fixings today. So I can do my Libors wherever U f****** want to put them.’

Lloyds trader to broker. March 31, 2009

‘I have always got loads of loans going out at the end of the month so I always try and fix it higher. Trouble is mate they keep calling it f****** lower.’

Lloyds employee after receiving request from colleague for higher Libor rate.

The Special Liquidity Scheme (SLS) was set up as a lifeboat for Britain’s ailing banks in 2008. It allowed banks to swap unwanted, mortgage-backed securities for desirable UK Treasury Bills which could be used to swiftly raise cash.

Participating banks were charged a fee by the Bank. This fee was intended to make the overall cost of SLS funding comparable with commercial borrowing.

Crucially, the banks were allowed to set their own ‘repo rate’ which would determine the level of fees.

During the period that Lloyds TSB and HBOS used the SLS, they paid £1.28billion in fees.

High street giants Barclays and Royal Bank of Scotland have already received hefty fines for manipulating Libor, which is a key inter-bank lending rate used to set mortgages.

But Lloyds is the first to be penalised for attempting to fix repo rates to reduce fees for the Special Liquidity Scheme.

Lloyds was the biggest beneficiary from the SLS, receiving more than £90billion in emergency funds before the scheme was closed in 2012. Yesterday regulators said that by manipulating the rate, Lloyds also reduced fees paid by other banks, meaning taxpayers were left further out of pocket.

Damning messages published by regulators showed how traders joked about rigging the interest rates.

One message sent by a trader to his manager on July 19, 2007, joked: ‘Every little helps…It’s like Tescos.’ The Lloyds manager replied: ‘Absolutely, every little helps.’

Reflecting the seriousness of the scam, £70million of the £105million penalty imposed on Lloyds by the UK’s Financial Conduct Authority was for rigging the repo rate. The remainder was for manipulating Libor.

A further Libor-linked fine of £113million was imposed by regulators in the US, bringing Lloyds’ total fine to £218million.

In total, 22 former and current Lloyds staff were involved in manipulating both rates. The bank said all of them have either left, been suspended or will now face disciplinary action. Lloyds has also agreed to a demand from Mr Carney to pay back the £7.8million. The taxpayer still has a 25 per cent stake in the bank.

Critics have complained that no bankers have been jailed for a string of scandals, although 12 people have been charged by the Serious Fraud Office over Libor-rigging so far.