The FINANCIAL — Australian law firm Slater & Gordon has been approached by several companies and investors about their legal options in the wake of the Barclays PLC rate fixing scandal, said a senior lawyer at the firm.
Van Moulis, practice group leader at Slater & Gordon in Sydney, said local companies and investors may be able to claim for losses on investments that reference the London interbank offered rate, or Libor, after Barclays paid a record US$453 million settlement to regulators for its part in fixing the key global lending rate.
Libor, which serves as the benchmark for rates on trillions of dollars of loans world-wide, is composed of daily submissions from a group of leading banks, which report their estimated costs of borrowing from each other. U.S. and U.K. regulators have launched criminal investigations into whether the banks colluded to fix rates to their advantage, including as a means of bolstering their own financial positions during the onset of the global financial crisis.
"This could be one of the largest damages claims for class actions in Australia," said Mr. Moulis. He estimated that the claim could total "at least hundreds of millions, if not billions of dollars."
More than a dozen banks, including Citigroup, HSBC and UBS, are already facing possible lawsuits in the U.S. from plaintiffs who bought Libor-linked securities from the banks, bought exchange-traded securities linked to Libor or received interest based on Libor. These include organizations as diverse as the city of Baltimore and Frankfurt-based asset manager Metzler Investment GmbH, which holds 47 billion euros ($59 billion) in assets.
A spokeswoman for Barclays didn't return calls.
Mr. Moulis said he was aware that "a number of the big institutions" are considering launching their own suits because of the size of their exposure to the scandal. "When you talk about the mammoth amount of products linked to Libor, that's when you start to get the big dollar signs," he said.
As Borsa Italiana – London Stock Exchange Group reported, in general, Australian companies use the bank bill swap rate as the benchmark rate for borrowing costs. But Libor forms the basis of over-the-counter currency-hedging tools, like interest-rate and cross-currency swaps. As of March, banks in Australia held a total of A$2.16 trillion in OTC foreign exchange swaps and A$8.52 trillion of OTC interest-rate swaps on their books, according to central bank data.
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