Cronograma de Actividades Diagrama de Gantt

98. As seen in the materials made public by the settlements already announced, Defendants were motivated to understate their borrowing costs to avoid negative publicity, particularly given the financial crisis that began to unfold in 2007 brought the banks under increasing scrutiny about their liquidity and creditworthiness. The BBA published the rates reported by every panel bank. If a panel bank’s published rate revealed that its peers were charging it higher rates than being charged to the other banks, this would signal that that bank was thought to be less creditworthy and riskier. In the worst case, fears could snowball and create a run on the bank. Therefore, Defendants had a motive to falsify the rates that they

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Further details on the rigging of Yen Libor have been revealed in a Singapore

wrongful termination lawsuit. In that case, Tan Chi Min, former head of delta trading for RBS’s global banking and markets division in Singapore (who worked for RBS from August 12, 2006 to November 9, 2011), alleges that RBS fired him “because he tried to improperly influence the bank’s rate setters from 2007 to 2011 to persuade them to offer Libor submissions that would benefit his trading positions.”

submitted to give the appearance that their funding costs were lower than they actually were, as to portray to the market a (false) appearance of financial health despite the deteriorating

condition of themselves and the marketplace.

99. The business press focused on high USD Libor submissions as a sign of distress. Such publicity increased Defendants’ motivation to coordinate and lower their submissions. For example, in early September 2007, when Barclays reported higher USD Libor rates than its peers, a Bloomberg article entitled “Barclays Takes a Money-Market Beating” questioned “So

what the hell is happening at Barclays and its Barclays Capital securities unit that is prompting its peers to charge it premium interest in the money market?” Other newspapers, including the

Financial Times and The Standard, ran similar articles.

100. By way of another example, an April 23, 2008 Société Généralereport questioned the strength of RBS, and noted that RBS had left itself “no capital headroom,” and recommended shareholders not invest further. Later reports noted the “loss of confidence in the bank’s ability to continue to operate as a private sector player . . . In this instance, the shares could have very limited value, if at all.”

101. As also confirmed by the settlement materials described above, Defendants were additionally motivated by the more direct desire to line their own pockets by way of their own exposure to interest-rate risk. An academic study by UCLA economics professor Connan Snider and University of Minnesota economics professor Thomas Youle, discussed below, concludes that bank portfolio exposure to Libor is a “source of misreporting incentive.” That is, by manipulating Libor, Defendants were able to control how much they were paying out to their own counterparties and affect the value of other instruments that could be traded.

102. One direct impact of suppressing Libor for a panel bank would be that it would have to pay less interest on its own portfolio. Defendants had “unbalanced” portfolios, meaning they often stood to pay more on floating-rate instruments than they stood to receive on floating- rate instruments. Suppression of Libor, then, would save the panel banks billions. For example, according to Snider and Youle, JPMorgan reported significant exposure to rising interest rates in 2009, stating that if interest rates increased by 1%, it would lose over $500 million in revenue.

103. As of September 30, 2008, Deutsche Bank calculated it could gain or lose €68 million for every basis point of change in the spread between Libor and Euribor, and had similar exposure to changes in the Libor “yield curve” (the relationship between short- and long-term rates).22 Deutsche Bank reportedly earned more than $650 million in profit during 2008 from trades tied to Libor because Libor was low.

104. Citibank’s 2007 Annual Report calculated that the bank would profit between $540 and $837 million from a 1% decrease in interest rates. In 2009, Citibank reported it would make $936 million in net interest revenue if rates would fall by 25 basis points per quarter over the next year and $1.935 billion if rates fell 1%.

105. Bank of America’s 2007 Annual report estimated that a 1% drop in USD interest rates would yield a profit of more than $800 million.

106. These motives were not just reason to submit misleadingly low reports, but to work together to do so. A single bank’s “low” submission may not move the published rate far enough for the banks to make their ill-gotten gains—and may have been excluded from the calculation as an “outlier.” And not wanting to appear “too risky” would mean the banks were

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incentivized to make sure that their “low” submissions were “low enough” relative to the others as to not still appear as the riskiest bank—but not “too low” as to draw scrutiny.