BTMU yanks third London worker amid Libor probe

Bloomberg

Mitsubishi UFJ Financial Group Inc. said its banking unit has suspended a London-based employee, the third worker in a month, as U.K. authorities investigate suspected manipulation of benchmark interest rates.

The Bank of Tokyo-Mitsubishi UFJ Ltd. worker has been asked to stand by at home, Hironori Imafuku, a Tokyo-based spokesman for Mitsubishi UFJ, said without naming the employee or giving further details.

The lender’s decision comes after the bank on July 10 said it suspended two traders in London in relation to the local regulator’s interbank lending rate probe. Barclays PLC in June was fined 290 million ($454 million) for Libor rigging, prompting authorities in Europe, Asia and the U.S. to broaden inquiries into manipulation of benchmark gauges for borrowing.

Derivatives traders Christian Schluep and Paul Robson were suspended from Bank of Tokyo-Mitsubishi UFJ, a source who asked not to be identified said last month. The two formerly worked at Rabobank, one of the banks being investigated by regulators over allegations they rigged London and euro interbank offered rates.

Last month’s suspensions were not related to Schluep and Robson’s work at the Japanese bank, Imafuku said at that time. The Yomiuri newspaper reported earlier Thursday that U.K. regulators are investigating the unidentified individual.

Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and Norinchukin Bank are among 18 that contribute to the fixing of the dollar Libor at the British Bankers’ Association, according to the group’s website. The three and Tokyo-based Mizuho Corporate Bank Ltd. are among 13 banks that set the yen Libor, the association said.

H.K. FSA presence eyed

Bloomberg

Japan’s financial watchdog is considering deploying a full-time inspector to Hong Kong for the first time to increase monitoring as its biggest banks expand assets in other parts of Asia.

A Financial Services Agency official would take charge of inspecting Hong Kong branch offices of Japanese lenders, including Mitsubishi UFJ Financial Group Inc., Hiroshi Okada, a spokesman for the regulator, said Thursday.

The International Monetary Fund said last week that Japan should deepen cross-border risk-monitoring, given the growing overseas operations of the nation’s financial institutions. Scrutiny of banks is mounting worldwide as authorities examine cases ranging from Standard Chartered PLC’s alleged transactions with Iranian banks to Barclays PLC’s interest-rate rigging.

“It’s obvious that regulators need more cross-border asset-monitoring as Japanese banks go abroad,” said Takayuki Atake, chief credit analyst at SMBC Nikko Securities Inc. “Local inspectors in Singapore, Hong Kong and elsewhere in Asia will have better access to information on assets in the local market.”

The FSA has full-time inspectors in New York, London and Singapore to examine risks associated with Japanese banks’ global operations.

“Having inspectors abroad makes it easier to examine overseas branch offices of Japanese financial institutions,” Okada said. “It also helps the agency oversee the Japan offices of foreign companies.”

Hong Kong was a key location when regulators investigated Tokyo-based AIJ Investment Advisors Co. for fraud this year. Japanese authorities called on their Hong Kong counterparts to help discover what happened to pension assets managed by AIJ, a government official said in March.

Executives of the fund manager allegedly covered up losses of ¥109.2 billion ($1.4 billion) from derivatives trades. Japan’s financial watchdog found a Hong Kong firm acted as a custodian for a fund managed by AIJ in the Cayman Islands.

New York’s Department of Financial Services said this week that Standard Chartered conducted $250 billion in deals with Iranian banks over seven years and processed transactions for institutions subject to U.S. economic sanctions. The bank may lose its state license.

Lending units of Japan’s three megabanks expanded loans in Asia by 27 percent to ¥11 trillion as of March 31 from a year earlier, according to data compiled by Bloomberg News based on filings from Mitsubishi UFJ, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. The increase drove a 22 percent gain in their overseas lending to ¥38.2 trillion.