Person in News: Bob Diamond
Bob Diamond, Barclays Chief Executive resigned.
Mr. Diamond and COO Jerry del Missier stepped down the day after Barclays Chairman Marcus Agius resigned and b/w an intense and deepening political row over standards in the City of London financial sector.
Why was Mr. Diamond pressurized to leave?
- There was an increased pressure on him to resign following the global interest rate manipulation scandal. The scandal, which may entail other international banks and spark off criminal prosecutions, pertains to manipulation of the Libor and Euribor inter-bank lending rates.
- These yardstick rates play a vital role in global markets, affecting what banks, businesses and individuals pay to borrow money and serving as a standards for contracts.
What are LIBOR, EurIBOR and MIBID/MIBOR?
· Libor is a flagship London instrument used throughout the world and Euribor is the eurozone equivalent. The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. It is a benchmark, along with the Euribor, for interest rates all around the world.
· The Euro Interbank Offered Rate (Euribor) is a daily reference rate based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market (or interbank market).
· On June 15, 1998, NSE launched the NSE Mumbai Inter-bank Bid Rate (MIBID) and NSE Mumbai Inter-bank Offer Rate (MIBOR) for the overnight money market.
- The feat of the Overnight NSE MIBID MIBOR encouraged the Exchange to develop a benchmark rate for the term money market and on November 10, 1998, NSE launched the 14-day NSE MIBID MIBOR.
- On December 1, 1998, NSE launched the longer term money market benchmark rates for 1 month and 3 months.
- NSE then introduced a 3 Day FIMMDA-NSE MIBID-MIBOR on all Fridays with effect from June 6, 2008 in addition to existent overnight rate.
- The MIBID/MIBOR rate is used as a bench mark rate for majority of deals struck for Interest Rate Swaps, Forward Rate Agreements, Floating Rate Debentures and Term Deposits. MIBOR is calculated by the average of the interbank offer rates based on quotations at nearly 30 major banks.
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