ABU DHABI – British bank Barclays plans to abandon its place in the rate-setting panel for interbank lending in United Arab Emirates (UAE) because of their involvement in the scandal involving the Libor rate in Britain.
The bank belongs to a panel of 12 banks set interest rates on interbank lending fees in UAE dirhams. Contributions are calculated according to the daily reach of interbank interest rates, used for trading financial instruments in the financial center of the Persian Gulf.
“Barclays has made its plans known to the UAE central bank, stating that it wants to leave the commission and the central bank called a meeting for Tuesday to discuss who will replace Barclays,” said a source familiar with the matter, requesting anonymity because a public announcement has yet to be made.
A Barclays spokesman was not immediately available for comment. UAE central bank officials declined to comment.
Late last month, Barclays agreed with regulators in the U.S. and Britain to pay a $453 million fine for trying to manipulate the London interbank offered rate (or Libor) through presentations to the rate-setting panel.
There were suggestions that the bank tried to manipulate the Libor.
Barclays has a wide range of operations in the UAE, including corporate and personal banking. Thanks to oil, the federation is the second largest Arab economy in the world. Dubai, one of the seven emirates of UAE, provides financial services to much of the Gulf by opening their markets and their international links.
It is unclear what would replace Barclays bank in the UAE committee, said a second source.
The UAE central bank would like to retain the current balance of the commission between local and foreign banks, but there are few obvious candidates, the source added.
“In addition to those already on the commission, most foreign banks have only general operations or just a small presence here in the UAE,” said the source.
In addition, Barclays, Citigroup , HSBC and Standard Chartered are on the commission along with eight local banks.