BBA avoided knowing which banks were rigging Libor, jury hears

Industry body regularly heard "everybody else is doing it, but we are not"

John Ewan
John Ewan leaves Southwark Crown Court in London after giving evidence in the Tom Hayes Libor trial on June 5, 2015

The director of Libor at the British Bankers' Association (BBA), John Ewan, did not know what his responsibilities would be once he knew which panel banks were deliberately skewing their Libor submissions between 2005 and 2007, so he told his informants not to name names, Southwark Crown Court heard today (June 8).

The BBA, an industry association, was in charge of calculating Libor from 1986 up to 2014. According to internal memos, claims were regularly made during the course of BBA visits to banks' London offices between 2005 and 2007 that panel banks were no longer reporting actual borrowing costs and purposely setting Libor to boost the profitability of their trading books.

The memos were shown by the defence at the jury trial of ex-UBS and Citigroup trader Tom Hayes, who has been charged with eight counts of conspiracy to defraud. The prosecution, represented by Mukul Chawla, argues that Hayes conspired with a large number of individuals at banks and brokers to rig the Japanese yen Libor rate between 2006 and 2010, for his own financial gain. Hayes has pleaded not guilty and says that attempts to influence the Libor rate were widespread. 


When a bank or other financial institution made an accusation that other banks were submitting incorrect rates, they were reluctant to name the offending banks, Ewan told the jury. Instead they maintained an attitude that "everybody else is doing it but we are not".

At the time the BBA had only two forms of discipline: a stern reprimand or removing a bank from the panel of contributors. But no panel banks were ever excluded from the panel, confirmed Ewan.

The court was shown today an email written by Ewan on November 29, 2007: "I am starting to receive more and more comments and queries on the levels at which rates are currently setting. These universally state that the rates are unrealistically low, as the few offers of cash in the markets are well above posted BBA Libor rates. Others comment that the BBA Libor rates do not correlate with other market indicators."

A transcript of a phone call in 2007 showed Ewan admitting to his colleague: "Somebody at Gulf International Bank rang me this morning and said, 'look, Libors are too low' and he says a contributor bank offered to take cash from him at ten basis points above what they had been contributing." He went on to say: "He didn't name the bank and I specifically asked him not to ... but that's not okay."

Ewan told the jury that he had not wanted his source to name the bank because he would not have known what to do with that information: "I didn't have clear guidelines," he said.

He admitted that the BBA as an industry body is supposed to act in its members' interests, so there could have been "difficulty" – bordering on a conflict of interest – if he found out that one of its members was manipulating Libor.

He couldn't remember if any investigation was launched following that particular incident. Instead, "our follow-up was to tell all the banks to submit accurate rates" in the form of official letters to the chairmen of panel banks.

Following a meeting with HSBC in 2005, Ewan noted in a memo that the bank executives at the UK bank "suspect that certain nameless contributors might be setting their rates with an eye on their derivatives book".

He said that he might have only been working at the BBA "for a fortnight or three weeks" at that point, and "wasn't in a position to take a view" on the accusation.

But in the course of 2006 and 2007, he also heard similar observations from several global banks including Bank of America, Credit Suisse, Bank of Tokyo-Mitsubishi UFJ and JP Morgan Chase. An internal BBA email was circulated on December 11, 2007, explaining there were clear problems with the definition of Libor. "It clearly isn't the rate at which banks lend to each other. It seems that the view is that the rate really indicated where you can access liquidity, and there might be a better way of defining this."

Ewan added that posting a high Libor rate was interpreted by the market as proof that the bank had a funding problem, but the banks weren't lending to each other anyway at the time due to the growing financial crisis.

"Nobody knows what the cost of borrowing should be when there's no cash market," Ewan told the jury today. But whenever he would ask panel banks if the definition of Libor should be changed, they were explicit that the definition should remain the same, he said.

The trial continues.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Investment banks: the future of risk control

This survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control

Op risk outlook 2022: the legal perspective

Christoph Kurth, partner of the global financial institutions leadership team at Baker McKenzie, discusses the key themes emerging from’s Top 10 op risks 2022 survey and how financial firms can better manage and mitigate the impact of…

Emerging trends in op risk

Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…

Moving targets: the new rules of conduct risk

How are capital markets firms adapting their approaches to monitoring and managing conduct risk following the Covid‑19 pandemic? In a webinar in association with NICE Actimize, the panel discusses changing regulatory requirements, the essentials…

Building resilience into ESG risk management

Risk and resilience continue to play an important role in the navigation of an increasingly uncertain world. Fusion Risk Management explores why it is equally crucial for technology to support organisations in addressing pertinent environmental, social…

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here