British banks face new US legal battle

BRITISH banks are facing fresh legal action after US authorities accused them of helping destroy American lenders once worth £340bn.

It’s claimed Lloyds, Barclays, Royal Bank of Scotland and others helped ruin 39 firms across the Atlantic by rigging Libor interest rates.

The US Federal Deposit Insurance Corporation (FDIC) has started action in the High Court to try to recover some of what it says was lost.

It says nine banks sought to rig Libor – a rate used to set around £270trillion of financial products – alleging they kept borrowing rates artificially low to appear financially stronger than they were at the height of the economic crisis.

The FDIC suggests that this made the 39 US banks more fragile and was partly responsible for their failure.

City sources played down the threat from the lawsuit, saying the corporation had a similar £780m bid thrown out by US courts.

It is likely to be a major blow for the British lenders, which have been clawing their way back to full health a decade on from the start of the crisis. Lloyds, Barclays and RBS declined to comment.