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Royal Bank of Canada caught in LIBOR class action maelstrom
13 July 2012
(CRC)—Financial regulators in the United States and in the United Kingdom, in the ongoing probe of the “largest financial scandal in the world today”, the “LIBOR-gate”, are focusing (but not exclusively) on the 16 international banks who fix the daily London 11 AM LIBOR interest rate for the US Dollar. Among these 16 banks is the Royal Bank of Canada. The RBC said it has done nothing wrong. “We have determined that RBC acted in accordance with the British Bankers’ Association requirement that our LIBOR submissions accurately reflected our perception of our cost of funds and that we did not collude with other banks,” it said in an emailed statement, reported the Financial Post on July 5th. Since the LIBOR rate is a global benchmark, that is a reference point for a series of securities and derivatives, not to mention interest rates on mortgages and loans, more sooner than later, Canadian citizens and businesses are going to proceed with class-action lawsuits and other legal action against the banks as it has already started in the United States. In Baltimore,Maryland, the Royal Bank of Canada (RBC) is being sued together with about 20 other institutions by the mayor and city council “over alleged losses from holding securities based on Libor,” reports the Financial Post. The total value of securities and loans affected by LIBOR is estimated at $800 trillion, the revolving debt in U.S. (mostly credit card debt) is estimated at $862 billion, compared to the GDP of the US at $15 trillion and the GDP of the UK at $2.48 trillion. |