British bank Barclays plans to pull out of the rate-setting panel for interbank lending in the United Arab Emirates because of its involvement in the Libor scandal in Britain, three industry sources told Reuters on Sunday.
Barclays belongs to a panel of 12 banks that quote indicative interbank lending rates in UAE dirhams. The quotes are averaged to arrive at a daily range of Emirates Interbank Offered Rates (Eibor), which are used to price financial instruments in the Gulf’s top financial centre.
“Barclays has indicated to the UAE central bank that it wants to quit the panel, and the central bank has called for a meeting on Tuesday to discuss who will replace Barclays,” a source familiar with the matter said, declining to be named because a public announcement has not yet been made.
A Barclays spokesman was not immediately available to comment. UAE central bank treasury officials declined to comment.
Late last month, Barclays agreed with U.S. and British regulators to pay $453 million in fines for attempting to manipulate the London Interbank Offered Rate through its submissions to the Libor panel. There has been no suggestion that it tried to manipulate Eibor.
Barclays has a wide range of operations including corporate and personal banking in the oil-rich UAE, which is the second-biggest Arab economy. Dubai, one of the UAE’s seven emirates, provides financial services to much of the Gulf because of its open markets and broad international links.
It is unclear which bank will replace Barclays on the UAE panel, a second source said. The UAE central bank would like to retain the current balance of the panel between foreign and local banks but there aren’t many obvious contenders, he added.
“Apart from those already on the panel, most foreign banks have just wholesale operations or only have a very small presence here in the UAE,” he said.
In addition to Barclays, Citigroup, HSBC and Standard Chartered sit on the Eibor rate-setting panel, along with eight local banks.