By Marc Jones
LONDON, May 31 (Reuters) - The European Central Bank putpressure on banks on Friday to stay in interbank lendingbenchmarks Euribor and Eonia, after a recent spate of highprofile withdrawals which have put the future of the gauges indoubt.
"The ECB strongly encourages banks to remain in, join orre-join the reference rate panels in order to ensure anappropriate level of participation, so that the reference ratesserve their purpose of adequately reflecting marketdevelopments," the ECB said in a statement.
Trillions of euros worth of financial products, from homemortgages to complex financial derivatives, are priced usingEuribor and Eonia and a complete unravellingof the rates would be a major headache for the banking system.
LBBW and Helaba became the latest German lenders to pull outof Euribor this week after the recent departures of big namebanks Rabobank, UBS and Citi.
The exodus has come as the credibility of the benchmarks hasbeen called into question by an inquiry into Libor-stylemanipulation and the huge drop in lending during the financialcrisis as bank-to-bank trust has crumbled.
The Libor scandal toppled the leadership of Barclays last year and has generated billions in fines. With theEuropean Commission expected to publish the findings of itsinvestigation into Euribor later in the year, the worry is thatmore wrongdoing could be uncovered.
Euribor-EBF, the organisation that runs the lending rates,had nobody available to comment on the ECB's support.
The Frankfurt-based central bank already helps calculateEonia and has been working with Euribor-EBF on new rates basedon transactions rather than the so-called 'estimates' that gavebanks the room to manipulate them for their own advantage.