Friday, March 6, 2015   

Bank of England faces unprecedented criminal investigation
(03-05 20:15)

Britain's Serious Fraud Office is investigating money-market auctions launched by the Bank of England during the financial crisis, the central bank has said.
The rare investigation deals another blow to the City's reputation.
The central bank said it had commissioned an inquiry into “liquidity auctions during the financial crisis in 2007 and 2008,'' and had referred the results to the Serious Fraud Office in November.
“Given the SFO investigation is ongoing, it is not appropriate for the bank to provide any additional comment on the matter at this time,’’ the BoE said in a statement issued late yesterday.
It is the first time that the central bank has been implicated in a criminal inquiry since the SFO was set up in 1987, while the development risks further damage to the City, the term used to describe London's banking sector.
Liquidity auctions are held by the central bank to ensure commercial banks are not left short of cash, a particular concern during the financial crisis when assets were written down and customers threatened to withdraw vast sums of money following the collapse of lender Northern Rock.
In the auctions, banks can bid to borrow the cash for varying lengths of time, secured by different types of collateral.
In November, Britain's Financial Times reported that the central bank was probing whether staff knew of or were involved in manipulating liquidity auctions.—AFP

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More breaking news >>

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