LONDON, July 6 (UPI) -- Britain's Barclays Bank rate-fixing scandal has become a criminal investigation with the Serious Fraud Office weighing in amid hints of potential prosecution of once mighty financial titans.
SFO law enforcers said a specialist team of investigators is looking into allegations that large-scale rigging of interbank lending rates for huge profits involved not just Barclays but also other banks.
International investigations so far into the rate-fixing scandal have involved British, U.S. and European law enforcement agencies, though details remain scant. The U.S. Justice Department is continuing its own investigation.
The Serious Fraud Office is an independent U.K. agency set up in 1988 to take up what normally would be police cases of complex, high-value financial crimes. The SFO can operate in England, Wales and Northern Ireland, but in Scotland its remit is conducted by the Crown Office's Serious and Organized Crime Division.
Neither the SFO, nor Scotland Yard nor government officials have issued details of the individuals and institutions being investigated, but at least a dozen banks were cited in finance industry reports about the probe.
Barclays Chief Executive Bob Diamond, a U.S. citizen, resigned less than a week after U.K. regulator Financial Services Authority fined the bank $450 million for trying to manipulate the London Interbank Lending Rate called Libor.
Libor measures the average rate banks must pay to borrow from rival banks for a specific period of time -- from a few weeks to up to a year.
Libor is calculated on a daily basis by the British Bankers' Association from estimates submitted by the major international banks based in London of the interest rate they must pay to borrow cash from other banks.
After the Lehman Brothers collapse in 2008 the Libor rate soared as anxiety about the banks grew. Before that crisis, Barclays more or less shadowed the Libor rate. However, as concerns over the bank's financial stability grew, Barclays found itself paying higher rates.
The accusation against Barclays is that it filed misleading figures for interbank borrowings its staff made and also tried to influence the Libor rate to boost profits.
Reports so far suggest other banks may also be involved in similar practices that gave them higher profits but also led to losses for customers, including possibly mortgage borrowers.
Analysts said the Libor scandal has hurt the reputation of London as a global financial center and it may not have come at a worse time. London is fighting EU regulatory pressures including taxation on all financial transactions, which analysts say will scare investors away from the city.
The scandal has also forced a major review of the financial system that determines daily interest rates and other deeply entrenched financial practices discredited by the Libor inquiry.