In my last post regarding the Libor scandal I outlined an interesting legal argument being deployed against Barclays in a case brought against them by a customer who had been mis-sold an interest rate swap agreement.
The customer’s solicitors are seeking to argue that an implied term of the swap agreement was that the Libor rate, which the agreement was based on, provided by Barclays was accurate. The customer alleges that Barclays are in breach of this unwritten term By artificially fixing Libor and providing the wrong rate, which renders the swap agreement void and unenforceable.
At the end of the post I suggested that this argument could potentially be used against other Banks involved in rate fixing who had also sold customers swap agreements based on Libor. In a recent interview RBS Chief Executive Stephen Hester conceded that "RBS is one of the banks tied-up in Libor” and that "We'll have our day in that particular spotlight as well”.
It will be interesting to see which other Banks step in to the spotlight regarding rate fixing in the near future and the knock on effect this may have to other banking products based on Libor.