Case motivation Barclays and the LIBOR scandal

Learning objectives
 Understanding:
 A leader’s responsibilities to their firm and the “system” (which is,
in the case, the financial markets) when operating in a
corrupt/broken system
 How a leader might consider how to best operate in this system
 A leader’s responsibilities to regulators and government when
they ask you to bend or break rules for the good of the system.
 How does one manage and navigate through such an
environment?
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Case Synopsis
 Barclays, one of the biggest banks in the world, agreed to
settle a case with the UK authorities and acknowledged
that it had manipulated LIBOR (London Interbank Offer
Rate).
 LIBOR was fundamental to the operation of the
international financial markets and the basis for
settlement of trillions of dollars of transactions.
 The scandal meant that the credibility of LIBOR was
questioned and raised the issue of who was responsible
for the manipulation.
 In this case, we examine the details behind the scandal
and the roles of multiple parties.
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Questions to consider
Question 1:
a) Who is hurt and who benefits most from the manipulation of LIBOR?
b) Comment on the concept of “zero sum game”
Question 2:
Who was most responsible for the manipulation of LIBOR?
Question 3:
a) How should leaders respond when they know their competitors are
cheating?
b) How should leaders respond when they think they are being asked
to cheat by regulators?

Questions to consider (2)
 Question 4:
New methodology has been developed for calculation of LIBOR. This
can be found in the pdf document ICE_LIBOR_METHODOLOGY on
Moodle and the ICE website –
https://www.theice.com/iba/libor#methodology
Briefly explain:
a) The changes that have been made to LIBOR
b) How these reforms can prevent manipulation of LIBOR. Ensure that
your discussion explores how the changes assist in managing the
risk of adverse selection.

 You may discuss in groups but document and submit individually:
o Penalties will apply if we spot collusion
 You must:
o Document the assumptions you have made (if any) that are not in the case
o Show calculations and results as an appendix (not always required)
o Depending on your formatting, about 2-3 pages and not more than 3 pages
in 1.5 spacing, 12 point font.
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Key points facts and problems:
1. What are the problems and the key issues that arise
2. Address the given discussion points or questions
3. Conclusions and recommendations if any
Do Not use a Q and A answer format: make this a business type briefing
And avoid simply restating what is already in the case
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