Japan Bank Group Sets Up New Body to Manage Tibor Benchmark Rate

Dec 27, 2013 3:44 am ET

Dec. 27 (Bloomberg) -- Japan’s biggest banking group will form a separate body to manage benchmark interbank lending rates, as the country’s financial watchdog seeks to tighten supervision of the gauges.

The Japanese Bankers Association, which calculates the Tokyo interbank offered rate, will build the organization “as soon as possible,” the group said in a statement today. The JBA also set a code of conduct for the banks that contribute rates, according to the statement. Those institutions include the lending unit of Mitsubishi UFJ Financial Group Inc., the nation’s biggest bank, according to the group’s Bloomberg page.

The measures come two days after an advisory panel to the Financial Services Agency recommended that the regulator get formal authority to supervise rate-setting organizations, as part of its efforts to revamp the regulatory framework in line with international trends. Global fines on companies including Deutsche Bank AG and Royal Bank of Scotland Group Plc for manipulating benchmark rates reached $6 billion this month, and other firms are under investigation around the world.

Under the new administrative body, the JBA will set up an independent oversight panel that mainly consists of external experts, the industry group said in the statement. It will also cut the number of Tibor rates to six from 13 in April 2015, according to the statement.

The banking group, headed by Takeshi Kunibe, president of Sumitomo Mitsui Financial Corp.’s lending unit, had said in July it was working on the changes.

--Editors: Nathaniel Espino, Darren Boey