Too few banks contribute to Sweden interbank rate - minister

Sweden's financial markets minister said on Thursday that there are too few players contributing to the daily Stockholm Interbank Offered Rate (STIBOR) but that he believes there has been no foul play by the five banks that set it.

Sweden's interbank rate has come under scrutiny in the wake of the scandal over Libor, the London equivalent that affects financial contracts worth hundreds of trillions of dollars.

"All markets function better with a large number of players," Peter Norman told Reuters. "Here, we only have five banks which set the STIBOR rate and that is a problem in and of itself."

Barclays agreed last month to pay $453 million in fines and penalties to settle allegations that some of its employees tried to manipulate Libor, the London Interbank Offered Rate, and other global rates from 2005 through 2009.

Barclays, which signed a non-prosecution agreement with U.S. prosecutors, is the first major bank to reach a settlement in the investigation, which also is looking at the activities of employees at HSBC, Deutsche Bank and other major lenders.

But Norman said he had seen no indication of such foul play in Sweden.

Danske Bank, Handelsbanken, Nordea , SEB and Swedbank are the only banks that currently contribute to STIBOR, the interest rate at which banks offer to lend Swedish crowns to each other without collateral.

Norman said that after talks with Sweden's Financial Supervisory Authority and the central bank, the government had authorised the Riksbank to conduct a review of STIBOR, which serves as a benchmark for some 40,000 billion Swedish crowns ($5.7 trillion) in corporate and consumer loans.

"Whether that can be done in a better way or not, I would like to wait for the Riksbank's review of this," he said.

The Riksbank's review is due sometime in the autumn.

If the highest or lowest bid deviates by more than 25 basis points from the next highest or next lowest bid, it is excluded before the mean value for STIBOR is calculated.

[Source: Reuters, Stockolm, 26Jul12]

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