Scandal-ridden LIBOR may be losing its benchmark status now that a smaller group of banks are the ones setting it, reports Bloomberg.
Submissions by Bank of America Corp., Citigroup Inc., Bank of Tokyo Mitsubishi UFJ Ltd., RBC, and Sumitomo Mitsui Financial Group Inc. have been used in setting the rate on an almost daily basis in the past four months, reveals data compiled by Bloomberg. Two years ago, none of these lenders made the list.
The dominance of smaller group may not accurately reflect the true health of the financial system, adds Bloomberg.
This news comes just weeks after the British Bankers’ Association (BBA) dropped its role in the setting of LIBOR.
Further, Britain’s financial regulator recently laid out a 10-point plan to overhaul the handling of key interest rates.