Lloyds Banking Group and Lloyds Bank this week have agreed to pay $370 million in civil and criminal penalties for acts of false reporting and attempted manipulation of the London Interbank Offered Rate.

As part of the settlement, the Lloyds Banking Group and Lloyds Bank (formerly known as Lloyds TSB) must pay the Commodity Futures Trading Commission a $105 million civil monetary penalty, cease and desist from violations of the Commodity Exchange Act, and adhere to specific undertakings to ensure the integrity of LIBOR submissions in the future.

In a related action, Lloyds Banking Group agreeing to an $86 million penalty and entered into a deferred prosecution agreement with the Department of Justice, in which it has deferred criminal wire fraud charges in exchange for Lloyds Banking Group continuing cooperation. The DPA requires the bank to admit and accept responsibility for its misconduct, and continue to cooperate with the Justice Department in its ongoing investigation of the manipulation of benchmark interest rates by other financial institutions and individuals.

In addition, the U.K. Financial Conduct Authority has imposed a collective $179 million penalty against Lloyds Bank and Bank of Scotland, a subsidiary of HBOS, which was acquired by Lloyds Banking Group in January 2009.

According to the CFTC’s order, prior to the acquisition of HBOS by Lloyds Banking Group, the Sterling and U.S. Dollar LIBOR submitters at each bank individually altered LIBOR submissions on occasion to benefit cash and derivatives trading positions. “Upon the consolidation of the two companies, the submitters, who were located in separate offices, coordinated with one another to adjust LIBOR submissions to benefit their respective trading positions,” the CFTC stated.  

The order also charged HBOS with altering and lowering its Sterling and U.S. Dollar LIBOR submissions to protect its reputation at the time Lloyds Banking Group was acquiring HBOS.  

The CFTC also settled charges that Lloyds TSB, from at least mid-2006 to October 2008, aided and abetted the attempts of derivatives traders at Rabobank to manipulate Yen LIBOR submissions to benefit the trading positions of Lloyds TSB and Rabobank.