Dutch bank Rabobank on Friday became the latest lender to pull
out of the panel of banks that sets the influential euro interbank
offered rate, known as Euribor.
A spokesman for Rabobank, which is among the banks in the euro
zone with the highest credit ratings, said the bank took the
decision as the very low volume of transactions in interbank
lending markets has had an impact on its business.
German lender Bayerische Landesbank, or BayernLB, also said
Friday it left the Euribor panel at the beginning of January for
"business-strategic" reasons.
Interbank lending benchmarks--particularly Euribor's
London-based cousin Libor--have been rocked by scandals over the
manipulation of rates. Attempted collusion in the setting of
Euribor--a closely followed benchmark which influences interest
rates on trillions of dollars of loans, mortgages, and
derivatives--is also being investigated by the European Union, The
Wall Street Journal reported in December.
Earlier that month, the organization behind Euribor, the
European Banking Federation, issued a plea to banks not to leave
its panel over risks to their reputation resulting from
manipulation scandals.
"Banks' responsibility in setting benchmarks is part of their
core role as market participants. That responsibility must remain
theirs and nobody else's. Withdrawing from the benchmark-setting
process would send the wrong signal," said Guido Ravoet, the EBF's
chief executive.
The organization also condemned the manipulation of interest
rates. The EBF couldn't be reached for comment Friday.
Two other banks, Citigroup Inc. (C) and Germany's DekaBank
Group, withdrew from the Euribor panel earlier in 2012.
The withdrawal of too many banks from the panel might threaten
one of the supposed advantages of Euribor compared with Libor--the
much larger group of lenders it canvasses. Following the latest
departures, the Euribor panel has 41 members, compared with 18 for
Libor.
The two rates are compiled in slightly different ways. Instead
of asking each bank how much it would cost it to borrow from a
fellow bank--as is the case for Libor--Euribor is based on an
estimate of how much it would cost a theoretical "prime bank" to
borrow.
The three-month Euribor rate--the most closely watched--rose
slightly to 0.191% Friday. A single bank leaving the panel is
unlikely to have a dramatic impact on rates in the future.
In explaining its decision to leave, Rabobank said changes in
money market circumstances have "strongly affected Rabobank's
business."
"As a result, Rabobank evaluated its contribution to the Euribor
panel from a business economics point of view. This has resulted in
Rabobank's decision to terminate its contribution to the Euribor
panel," the bank said.
Rabobank's resignation from the panel was effective Jan. 3, it
added, making Friday the first day that it didn't contribute.
A Rabobank spokesman said the changed circumstances are linked
to the drying up of liquidity in money markets since the onset of
the euro-zone debt crisis, but declined to elaborate on how this
has affected the bank's business.
The European Central Bank earlier in 2012 pumped cheap liquidity
into the single currency's banking system in an effort to help
beleaguered lenders weather the debt crisis. The flood of cash
drove down interbank lending rates and suppressed volumes in the
interbank lending market, as many banks chose to rely on the ECB's
operations for funding.
In 2012, unsecured cash lending and borrowing reached their
lowest level since 2002, according to an ECB report published in
December.
Write to Tommy Stubbington at tommy.stubbington@dowjones.com
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