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BW Businessworld

Libor Trouble

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The ghosts of the financial crisis continue to haunt us. Regulators in London, New York and Tokyo have expanded an investigation they began in March this year — it could have started in October last year — into whether treasury departments in banks in the three cities colluded to rig the London Interbank Offer Rate (Libor) — the rate at which banks lend to each other — and its Japanese equivalent, Tibor at the height of the crisis. The possibility of such rigging was also raised back in April 2008.

Why should this matter? Because about $350 trillion (or Rs 157.5 crore, or think of it as 300 years worth of current Indian GDP)  worth of contracts — futures, derivatives, bond rates — are set based on Libor.

Libor is set by the British Banks Association; banks from all over the world are to give their rate for different currencies, the lowest and highest rates are thrown out, and the average of the rest taken. Tibor is set in Tokyo through a similar process.

Just what we don't need — more global uncertainty.

STRICTLY BUSINESS

TCS, Wipro and Infinite Computer Solutions are the three companies in the race to bag the Sri Seva Project of the Tirumala Tirupati Devasthanam to provide IT solutions to the temple. At stake is Rs 30 crore.