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By Kirstin Ridley and Matt Scuffham
LONDON, July 30 (Reuters) - Britain's Serious Fraud Office(SFO) is examining material that might trigger a criminalinvestigation into former and current staff at Lloyds BankingGroup, the partly state-owned bank, sources said onWednesday.
The sources said the SFO was looking at information it hadbeen handed by the UK Financial Conduct Authority (FCA) somemonths ago linked to an inquiry into alleged manipulation ofbenchmark rates, including one used to set the fees on ataxpayer-backed funding scheme for banks.
Lloyds, 25 percent state-held, declined to comment, sayingonly that it assists all authorities with investigations. TheSFO simply said it worked closely with UK and overseas agencies.
On Monday, Lloyds was fined a joint $370 million by the FCAand U.S. regulators for its part in a global interest raterigging scandal. Lloyds also became the first bank to faceallegations of attempting to manipulate the "repo" rate.
Seven banks and brokerages have so far settled U.S. and UKregulatory allegations of interest rate rigging as a result of aglobal investigation and 17 men have been charged withfraud-related offences.
The repo rate determined the fees Lloyds paid to access theBank of England's special liquidity scheme (SLS), temporarilyset up in 2008 to shore up UK banks during the financial crisis.The FCA said on Monday four traders, including two managers,were involved.
Bank of England Governor Mark Carney has already toldLloyds' Chairman Norman Blackwell that the manipulation couldprompt criminal action against those involved.
"Such manipulation is highly reprehensible, clearly unlawfuland may amount to criminal conduct on the part of theindividuals involved," Carney wrote on July 15 in a letterpublished by Lloyds on Monday.
LLOYDS TIP-OFF
Lloyds spotted alleged repo rate fixing during an internalinvestigation into whether traders manipulated benchmarkinterest rates such as Libor (London interbank offered rate),against which around $450 trillion of financial products fromderivatives to student loans are priced globally.
It passed this information on to the FCA in 2013, accordingto one of the sources.
If the FCA discovers possible criminal wrongdoing duringregulatory inquiries, it routinely passes this on to the SFO.
The SFO said: "The SFO's investigation into rate rigginginvolves considerable co-operation and information sharing withother agencies, including the Financial Conduct Authority andthe U.S. Department of Justice."
Two thirds of the FCA's 105 million pound fine slapped on Lloyds on Monday was due to the bank's attempt to fix the reporate between April 2008 and Sept. 2009.
The bank was also fined $105 million by the U.S. CommodityFutures Trading Commission and had a $86 million fine imposed bythe U.S. Department of Justice for attempting to fix the Liborrate for yen, sterling and the U.S. dollar.
The FCA alleged that 19 staff at Lloyds and its Bank ofScotland subsidiary were directly involved in or aware of raterigging. Another three are also under investigation by the bank,one of the sources said.
To date, six members of Lloyds' staff have been suspended,six others face disciplinary proceedings and 10 have left thebank.
Lloyds staff have not been among the 17 charged to date withfraud-related offences by U.S. and UK prosecutors in connectionwith benchmark interest rate rigging allegations.
Those men worked at Swiss bank UBS, Britain'sBarclays, brokerages RP Martin and ICAP andDutch group Rabobank. (Editing by Jeremy Gaunt)
