* BoE Governor says regulator to assess further action
* FCA finds serious abuse of government liquidity scheme
* Fined 105 mln stg by UK Financial Conduct Authority
* Fined $105 million by U.S. CFTC, $86 mln by DoJ
* Bank of England says Lloyds behaviour 'clearly unlawful' (Adds comment from BoE Governor, lawmaker, regulator)
By Matt Scuffham and Huw Jones
LONDON, July 28 (Reuters) - Lloyds Banking Group could face further punishment after agreeing to pay finestotalling $370 million for its part in a global interest raterigging scandal and for attempting to manipulate fees for agovernment lending scheme to help banks.
The settlement is the seventh joint penalty handed out byAmerican and British regulators in connection with the attemptedmanipulation of the London interbank offered rate, or Libor, andother similar benchmarks used to price around $450 trillion offinancial products worldwide.
But it is the first penalty for attempting to fix so-called"repo" rates to reduce fees for a taxpayer-backed scheme set upby the Bank of England to support British banks during the 2008financial crisis.
This special liquidity scheme (SLS), launched in 2008, wasan attempt to free up banks' balance sheets and boost confidencein the financial system. It enabled banks to exchangehard-to-trade mortgage assets for government bills.
Bank of England Governor Mark Carney said in a July 15letter to Lloyds' chairman Norman Blackwell the attemptedmanipulation could lead to criminal action against thoseinvolved.
"Such manipulation is highly reprehensible, clearly unlawfuland may amount to criminal conduct on the part of theindividuals involved," Carney wrote.
He said Britain's financial regulator would consider whetherfurther action should be taken against Lloyds or the individualsinvolved. Any criminal action against individuals would be takenby Britain's Serious Fraud Office, which declined to comment.
Britain's Financial Conduct Authority said the abuse of theSLS had been a novel feature of Lloyds' case.
"Colluding to benefit the firms (Lloyds and Bank ofScotland) at the expense, ultimately, of the UK taxpayer wasunacceptable," Tracey McDermott, the FCA's director ofenforcement and financial crime, said.
The Bank of England said Lloyds, the biggest user of theSLS fund, has paid it 7.8 million pounds in compensation for thereduction on the amount of fees it received as a result.
The FCA fined Lloyds 105 million pounds, two-thirds of whichrelated to attempted manipulation of the SLS scheme through thefixing of the UK's repo rate.
"SHOCKING CONDUCT"
"It is really alarming," Mark Garnier, a Conservativelawmaker who sits on parliament's Treasury Select Committee,said. "This is, on the face of it, a deliberate action todefraud the taxpayer. We will need to look at what exactly hasbeen going on. People will be very angry about it and rightlyso."
Lloyds' chairman Blackwell, responding to Carney in a letteron July 16, said: "This was truly shocking conduct, undertakenwhen the bank was on a lifeline of public support."
Lloyds was also fined $105 million by the U.S. CommodityFutures Trading Commission and $86 million fine by the U.S.Department of Justice for attempting to fix the Libor rate foryen, sterling and the U.S. dollar.
The DoJ entered into a deferred prosecution agreement withLloyds, holding off on criminal wire fraud charges in exchangefor Lloyds continuing to cooperate with its enquiries.
The FCA found that Bank of Scotland, which Lloyds lateracquired, manipulated Libor submissions as a result of at leasttwo management directives in September and October 2008 to avoidnegative media comment and alter market perceptions of itsfinancial strength.
It said that in September 2008, just after the collapse ofLehman Brothers sparked a global market meltdown, a managerinstructed a trader to lower dollar Libor submissions.
"I've been pressured by senior management to bring my ratesdown into line with everyone else," a third trader said.
The FCA said there had been routine manipulation of sterlingLibor submissions to benefit money market trading positionsbetween September 2006 and June 2009.
Emails uncovered by the FCA showed traders seeking to pegLibor quotes to "suit the books".
For example, on July 19, 2007 when a Lloyds manager wasinformed by a Lloyds trader about a request made to anotherLloyds trader for a low rate, the trader commented: "Everylittle helps... It's like Tesco's", repeating an advertisingslogan used by Britain's biggest retailer.
The Lloyds manager replied: "Absolutely, every littlehelps".
Lloyds was rescued by a 20.5-billion-pound governmentbailout during the financial crisis. Taxpayers still hold a 25percent stake in the bank five years later.
Lloyds' settlement follows British rivals Barclays and Royal Bank of Scotland, which agreed to pay fines of$453 million and $612 million respectively in 2012 and 2013.
The FCA said sixteen individuals at Lloyds, seven of themmanagers, were directly involved in or aware of the variousforms of Libor manipulation, including one manager who was alsoinvolved in the repo rate misconduct.
Shares in Lloyds were unchanged at 74.8 pence.
($1 = 0.5884 British Pounds) (Additional reporting by Aruna Viswanatha and Jonathan Leff inWashington and William James, William Schomberg, Clare Hutchisonand Sudip Kar-Gupta in London; Editing by Tom Pfeiffer and JaneMerriman)
Lloyds (LLOY)
