Today's LIBOR Rates
1 M |
0.31563 |
 |
3 M |
0.47500 |
|
6 M |
0.68794 |
|
1 YR |
1.06438 |
|
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The Banks Behind LIBOR
Barclays PLC
March 02, 2009
“Contributor banks” selected by the British Bankers’ Association (BBA) report their daily interbank lending rates for different maturities and currencies, and from these data the BBA computes the LIBOR indices. This is an overview of one of those contributor banks.
Barclays PLC is a contributor for each of LIBOR’s 10 monitored currencies. The institution is a mammoth global concern that has played a major role in the modern economy, from the dawn of commercial banking in the 17th century to the financial collapse of 2008. Barclays PLC is the fourth largest financial institution in the world and the 25th largest company overall.
John Freame and Thomas Gould launched what would become Barclays in 1690 when they became goldsmith bankers on London’s Lombard Street. Goldsmith bankers were the early version of contemporary banks, developing a system of deposits and lending as gold holders would store their precious metal with the establishments for safe keeping, receiving notes in return as proof of assets. When it became clear that customers would be happy with redeeming any gold—not necessarily the original physical substance they turned over to the banks—goldsmith bankers learned that they could convert deposits into loans.
The “Black Spread Eagle” emerged as the bank’s icon in the 1720s. The Barclays name came into play in 1736 when John Freame’s son-in-law, James Barclay, became a partner. The bank grew in the 1800s as it built a new headquarters on Lombard Street midcentury and united with 19 other private banking businesses at century’s end. The new Barclay and Company Limited had nearly 200 branches and £26 million in deposits. Family and religious ties helped keep the expanded company united, earning it the nickname “The Quaker Bank.”
Expansion continued during the first quarter of the 20th century, with acquisition of Bolithos Bank and United Counties Bank and amalgamation with the London, Provincial and South Western Bank. By the end of the World War I, Barclays was known as one of the UK’s “big five” banks. By the middle of the 1920s, it had approximately 2,000 outlets. At this time, Barclays went international when it merged the Colonial Bank, the Anglo Egyptian Bank and the National Bank of South Africa, creating a market that spanned the West Indies to the Middle East.
During the 1960, Barclays was a trendsetter, introducing the UK’s first computerized banking center and credit card and the world’s first ATM machine. It entered the U.S. market with Barclays Bank of California, based in San Francisco. In the 1980s, Barclays’ UK and international interests merged as Barclays PLC. The company introduced “Connect,” the UK’s first debit card. During the decade, Barclays became the first foreign bank to file with the SEC and the first British bank listed on the New York and Tokyo stock markets. It offered telephonic and online banking during the 1990s.
The 21st century saw a series of acquisitions for Barclays, including Woolwich plc, U.S.-based Juniper Bank, Spain’s Banco Zaragozano, Absa Group Limited of South Africa, the HomEQ Servicing Corporation, and financial Web site Comparetheloan. Its growth encompassed mortgages, credit cards, insurance, and investment products.
At the end of the decade, Barclays’ major acquisitions addressed the global economic slide. To offset deteriorating market conditions in its home market, Barclays bought Russian Expobank in early 2008. This move capitalized on shifting revenue trends, as 50% of earnings were now coming from outside the U.K. In late 2008, the failure of Lehman Brothers triggered a major financial collapse, and Barclays played a role in the aftermath. For $1.75 billion, it purchased key Lehman Brothers assets including core capital market businesses and the investment house’s Manhattan headquarters building.
The accuracy and relevance of LIBOR rests on its contributor banks. With Barclays PLC, LIBOR has a constituent that has been witness to the emergence of the banking industry, the American Revolution, the defeat of Napoleon, and two world wars—three centuries of experience it will use to navigate today’s challenges.