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Intense calls for investigation of Swedish banks' interest rate system after the Libor Scandal in the UK

Monday, 16 July 2012
Questions are being asked in the Swedish banking sector if similar libor scandal and rate fixing as in the UK is also entrenched in the Swedish banking system.

This is because traditionally in Sweden there has been a strong dichotomy between the individual banks interest rates, the repo rate and the house prices. Why are Swedish house prices too over valued and why the banks having this attitude quickly change interest rates after the repo rates are announced?  

After the rate fixing scandals in the UK in which the British bank, Barclays tried to manipulate interest rates, property owners in Sweden want to understand how the Swedish system works. This is because, according to industry organization, the banks have the ability to charge excessive interest rates from their customers in Sweden.

According to a documentary on Swedish television on Sunday, it became clear that Sweden has one of the highest margins in the western world when it comes to one of the key interest rates that banks charge to lend to each other know here as "Stibor" - compared with the central bank's policy rate.

After the scandal in the UK and various hearing is being planned, Swedish property owners would want have an outline of how "Stibor" works in Sweden.

In Britain the design of the "Libor" which is similar to Swedish "Stibor" by banks has become a major scandal when it turned out that a bank, Barclays, attempted to manipulate Libor.

A part of the bank's management was forced to resign, and the consequence has been that confidence in the British system has received a blow. In Sweden, there is a distrust of the market side of the banking business and the Riksbank has therefore decided to conduct a review of how "Stibor" worked the last five years, even if there are no concrete suspicions that the system has been abused.

Swedish politician including former economic minister Leif Pagrotsky has called for investigation of similar Libor operation in Swedish banks and to determine how Sweden has been affected.
by Team

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