Libor-fixing scandal may have had effect on building societies

The Building Societies Association, which represents all 47 building societies, said it is too early to comment on whether it will take legal action, but said its members might have lost out due to banks fixing the rate.

“We are adopting a watching brief to establish if there have been any adverse consequences to our sector,” said Adrian Coles, director-general of the BSA.

“The BSA welcomes the prospect of a review to get to the bottom of the rate fixing scandal that is so badly affecting the reputation of the banks.”

He added that no BSA member was involved in the setting of Libor and very few members of the mutual sector set rates using Libor as the reference rate.

“Right now we are simply adopting a watching brief to establish if there have been any adverse consequences to our sector.

“With the Libor rate potentially both low and high-balled at various times the picture is complex,” said Mr Coles.

There is a possibility that building society profits could have been hit by the banks pushing down the floating rates, but they could also have been boosted by them pushing them up to suit their needs at the time.

Tanya Jackson, corporate affairs manager at the Yorkshire Building Society, the UK’s second biggest mutual lender, said: “We could well have lost out if Libor was artificially low over the last few years.”

Barclays incurred fines from UK and US authorities for falsifying its Libor rate.

Between 2005 and 2009, some 257 requests were made to Barclays submitters to alter the Libor fixing, according to a report from the UK’s Financial Services Authority.

Building societies have reported a sharp increase in business over the past week as customers turn their backs on traditional banks in the wake of the latest banking scandal.