A group of 14 local authorities is taking legal action against banking giant Barclays, claiming that manipulation of Libor rates cost them millions in repayments on Lender Option Borrower Option (LOBO) loans.
In 2012, Barclays was fined £290m for attempting to manipulate the world’s benchmarking borrowing rate.
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According to the Daily Mail, the group of authorities are now claiming that the bank should rescind their LOBO loans and pay them compensation.
Law firm Hausfeld confirmed to Room151 that it is representing the councils and has filed an initial “protective claim” against Barclays.
The 14 councils involved are understood to be Bristol, Bradford, Greater Manchester, Kirklees, Leeds, Liverpool, Newcastle, North East Lincolnshire, Nottingham, Oldham, Sheffield, South Gloucestershire, Walsall and West Yorkshire.
According to the Mail, the group’s claim form accuses the bank of “deceit and/or fraudulent misrepresentation” as its bankers were secretly rigging Libor, which was “integral” to the rate at which Lobo loans had to be paid back.
Joel Benjamin, spokesperson for Debt Resistance UK, a group which has campaigned against LOBOs, said: “Having campaigned for councils to file fraud cases against the banks since 2014, we are thrilled councils have finally stepped in to protect local taxpayers by filing fraud claims against banks which brought our economy to the brink.
“Ten years after the crash, its town councils now face bankruptcy to pay for the bankers’ bailouts.”
He called on the other 224 councils with LOBO loans to file legal actions.
In 2015, councils were attacked for taking out LOBOs in an investigation by Channel 4 series Dispatches.
At the time, councils defended their decision to enter into the arrangements.
Later that year, A House of Commons select committee heard concerns about LOBO lending to local authorities, including a former derivatives trader who described being “deeply uncomfortable” about the loans.
