May 15, 2018 / 4:53 PM / a year ago

REFILE-Former Euribor trader says saw nothing wrong with rate requests

(Refiles with corrected slug)

By Kirstin Ridley

LONDON, May 15 (Reuters) - A former Barclays trader, charged with conspiring to rig Euribor benchmark interest rates, told a London jury on Tuesday that his superior had told him to ask colleagues for rates that would benefit the bank - and he was never told that was dishonest.

Italian-born Carlo Palombo, 39, who is now a teaching assistant at the University of California, told London’s Southwark Crown Court that he had learnt about trading euro swaps on the job, reporting to co-defendant Philippe Moryoussef.

Watched by his wife and family in the public gallery, Palombo was the first defendant to give evidence in the fifth Serious Fraud Office (SFO) prosecution of traders for alleged rate rigging. The trial is expected to last until the end of June.

He said he did ask colleagues to nudge rates to benefit bank trading positions around a decade ago, but added: “It would have been Philippe telling me to do it.”

He said noone had said at the time that he or anyone else at Barclays had acted dishonestly and the jury heard that Palombo had been told in an appraisal to “learn from Philippe and senior traders around you”.

Anglo-Italian Palombo; Moryoussef, a Frenchman who is being tried in absentia; Briton Colin Bermingham;, Sisse Bohart, a Dane; and German Achim Kraemer each deny one charge of conspiracy to defraud by dishonestly manipulating Brussels-based Euribor rates between 2005 and 2009.

The group, aged between 39 and 61, are all former Barclays bankers apart from Kraemer, who remains employed by Deutsche Bank.

They are the first people to be charged worldwide in relation to Euribor, the euro counterpart of the London interbank offered rate (Libor). The rates are benchmarks for around $450 trillion of financial contracts and loans worldwide.

The group’s most high-profile co-defendant, former Deutsche Bank star trader Christian Bittar, a French citizen who worked at the German bank’s offices in London and Singapore until 2011, pleaded guilty in March.

Palombo, who joined Barclays in London in 2002 as a trainee, described his understanding of how Euribor rates were fixed as “a belief that grew organically while working on the desk”. He said he thought all banks took commercial interests into account when deciding on their rates.

The prosecution alleges that Euribor rates should be set independently of bank trading positions, reflecting only interbank lending rates, and that attempts by traders to influence such rates were dishonest.

Asked to describe Moryoussef, Palombo said: “He was a nice guy - chatty.” Moryoussef and Bittar were friends and went skiing together, the court heard.

The jury has been told that Moryoussef “voluntarily absented himself from his trial”.

Palombo did not answer SFO questions when he was first interviewed as part of the Euribor investigation on the advice of his lawyers at the time, he said.

In a prepared statement, signed March 23, 2015, he said only: “I do not accept that I behaved dishonestly in any way during my time at Barclays.”

Some of the world’s most powerful financial institutions have paid around $9.0 billion to settle allegations of rate rigging. Deutsche Bank paid $2.5 billion in 2015, while Barclays was the first to settle, paying $453 million in 2012.

Reporting by Kirstin Ridley; Editing by Adrian Croft

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