David Cameron Visits Royal Marines Base In Poole
1 August 2014, 16:14 | Updated: 1 August 2014, 16:20
Millions of pounds of fines imposed on Lloyds Banking Group for manipulating lending rates will go to military good causes.
The Prime Minister, along with the Chancellor George Osborne, made the announcement on a visit to a Royal Marines base in Poole.
"Lloyds bank have been fined £100m for manipulating the market," Mr Osborne said.
"That is a terrible thing to have done but I'm making sure the money is being put to good use.
"It's going to help soldiers returning with injuries, to make sure they get long-term care; it's going to help families while their loved ones are away in the military.
"In other words, people who have demonstrated the worse of values in the City are going to be supporting those who've demonstrated the very best of British values in the Armed Forces."
The UK's Financial Conduct Authority (FCA) fined Lloyds £105m, and it was also heavily fined by US regulators, with the overall penalty coming to £218m.
Lloyds manipulated Libor - the interest rate banks charge one another - and also tried to rig fees payable to the Bank of England under a scheme supporting banks during the financial crisis.
The Libor rate - the basis of trillions of dollars of financial transaction - is set daily and is also a reflection of an institution's credit worthiness.
So if it is low, the perception is a bank is a safe bet to deal with.
The implication is that during the 2008 bank crisis the rate may have been manipulated to make some banks look healthier than they were.
Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said its previously lax culture was to blame.
It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."
More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £390m by RBS.