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German banks probed

July 30, 2012

German banking regulators are examining the books of eight German banks to see if they manipulated a key European interest rate, known as Euribor. The move comes in light of the much bigger Libor rate-fixing scandal.

Frankfurt's banking district
Image: picture-alliance /dpa

According to newsmagazine Der Spiegel, the group of German banks being investigated for Euribor manipulations included Deutsche Bank and Commerzbank, which are Germany's biggest private banks, as well as regional state-owned lenders DZ Bank, LBBW, BayernLB, Helaba, NordLB and Landesbank Berlin.

The banks had been ordered to present "all documents" relating to their calculations of the European Inter-Bank Offered Rate (Euribor), the magazine wrote Monday.

Quoting an unnamed source within the German financial market regulator BaFin, who was dealing with the probe, the regulators were examining the documents to see if there was enough evidence to support a full-scale investigation into the banks.

The BaFin probe comes on the back of the Libor interest rate-rigging scandal, in which major global banks, including Barclays, Deutsche Bank, HSBC and others, stand accused of fixing the London Inter-Bank Offered Rate (Libor).

Both Libor and Euribor are based on bank estimates of how much interest they have to pay for lending each other capital. The rates are important for determining interest rates for mortgages, loans to private individuals and credit to businesses.

Traders at the banks incriminated in the Libor scandal stand accused of tweaking the estimates in their favor and to the detriment of customers.

Last week, the European Commission said it would try to restore market confidence by asking member states to criminalize the rigging of interest rates. EU Internal Markets Commissioner Michel Barnier said the scandal was "yet another example of scandalous behavior by the banks."

Britain's Barclays was fined 290 million British pounds (371 million euros) last month, after admitting it attempted to manipulate the Libor and Euribor rates between 2005 and 2009.

BaFin declined to comment on the Euribor probe into German banks on Monday.

uhe/ncy (Reuters, AFP)

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