LONDON/FRANKFURT The United States and Britain will by mid-year levy more fines against those alleged to have been involved in interest rate rigging, with broker ICAP IAP.L and U.S. bank Citigroup (C.N) among names in the spotlight, sources close to the probe said.
"There will be more in the first half of this year," said one source with knowledge of the complex probe that is involving more than a dozen of the world's top banks and brokers. "Things are progressing ... and you will see a lot more this year."
A separate source close to the investigation said JPMorgan Chase (JPM.N) and Germany's Deutsche Bank (DBKGn.DE) are in focus alongside ICAP and Citigroup after UK and U.S. regulators fined Britain's Royal Bank of Scotland (RBS.L) on Wednesday.
U.S. and UK regulators have fined three banks to date - RBS, Britain's Barclays (BARC.L) and Switzerland's UBS UBSN.VX - a total of $2.6 billion for allowing traders to game Libor interbank rates in a global scam.
The regulators' timetable is an indication the probe is gathering pace, as investigators piece together evidence to ascertain which traders at which banks and brokerages attempted to manipulate Libor, the London interbank offered rate.
Reams of emails and computer message exchanges released by regulators allege traders colluded for years with peers at other banks and brokers to rig Japanese, Swiss and U.S.-denominated Libor, a benchmark used to price some $500 trillion worth of contracts from derivatives to credit cards.
"Deutsche, Citi and JPM are the banks named in regulatory circles as those candidates near the next settlements," said the second source.
The three banks declined to comment.
BROKERAGES FEEL HEAT
Regulators have also said up to five interdealer brokers -- firms which take a commission for matching buyers and sellers of financial instruments -- helped traders rig rates.
A third source, who also declined to be named because the matter remains confidential, said that UK interdealer broker ICAP IAP.L was firmly on the regulatory radar screen.
ICAP confirmed in January that the FSA was investigating one of its subsidiaries over Libor.
The brokerage said on Thursday it had suspended one trader and put three on administrative leave in connection with its own internal Libor investigation but declined to elaborate further.
ICAP also declined to comment on whether the group expected a regulatory fine - or when investigations would be concluded.
Deutsche Bank on Tuesday suspended five traders suspected of inappropriate conduct after an internal investigation into possible manipulation of Libor's euro equivalent Euribor.
The bank, which has already set aside nearly 2 billion euros to cover legal liabilities including possible Libor-related costs, suspended two traders last year for Libor misconduct. It declined to comment on any fine, beyond reaffirming that it is cooperating with authorities.
A German fine, however, is likely towards the end of the year.
German regulator BaFin only began an in-depth Libor probe into Deutsche Bank last year -- around four years after the Washington-based Commodity Futures Trading Commission (CFTC) initiated an industry-wide investigation into dollar Libor.
BaFin is expected to finalise its report by early March, financial sources said. That report can then provide the meat for a transatlantic settlement.
"Any settlement talks with Deutsche Bank can only start when this report is finished," noted one German financial source.
BaFin said it is in the process of evaluating the results of its investigations, with conclusions due in the coming weeks.
"Special probes were launched in some cases," the head of the German financial watchdog Elke Koenig told Reuters.
"We are fully on schedule. The investigators have to do some follow up work on some of the reports," she said.
The U.S. CFTC, the Department of Justice and Britain's FSA are the only regulators to have cooperated to together fine banks over Libor in transatlantic settlements. But talks can be tortuous and complex, regulatory and bank sources have warned.
(Additional reporting by Rick Rothaker in New York; Editing by Sophie Walker and Alexander Smith)