Crown Office confirms probe into Scottish banking sector

The Crown Office is conducting an investigation into the Scottish banking sector, it has revealed.

It said it had decided to confirm that an investigation had been under way for some time because of “the degree of public concern about recently reported issues in the banking sector”.

The Crown Office said the scope of the inquiry would now be extended “as a result of recent developments”.

The Serious and Organised Crime Division is leading the investigation.

The announcement follows revelations that bank officials at Barclays were providing false information to markets.

Chief executive Bob Diamond resigned a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.

Mr Diamond said he was stepping down because the external pressure on the bank risked “damaging the franchise”.

Chief operating officer Jerry del Missier also resigned, the third top executive in two days to do so.

Under investigation

The Royal Bank of Scotland is one of several other international investment banks to be under investigation over the issue.

Confirmation by the Crown Office of its investigation into the banking sector also follows claims by a legal expert that Scots law could be used more readily than English statutes to press ahead with bank fraud prosecutions.

Alistair Bonnington said the law on fraud was handled under common law in Scotland, so it was seen as unnecessary for court cases to be constrained by the wording of the Fraud Act 2006.

He told BBC Scotland that Scottish prosecuting authorities should have pursued those responsible for the near-collapse in 2008 of Royal Bank of Scotland and Halifax Bank of Scotland, which is now part of Lloyds Banking Group.

“We have a common law crime of fraud, instead of statue law, and that’s much more flexible and usable,” he said. “There wouldn’t be the least difficulty in jurisdiction in getting a case into court in Scotland.”

Prof Bonnington went on to say that other banks could be drawn into Scots law prosecutions.

“The Libor rate-fixing case affected countries all over the world, it affected people in Scotland as much as in America, England, Wales and Germany for that matter,” he added.

Parliamentary inquiry

On Monday, Prime Minister David Cameron announced a parliamentary inquiry into the UK banking sector.

He told the House of Commons the manipulation of inter-bank lending rates had been a “scandal”.

Last week, the Financial Services Authority announced that some banks had mis-sold specialist insurance, known as interest rate swaps, to thousands of small businesses.

The FSA said it had found “serious failings” in the sale of the products, which were designed to protect firms taking out loans against rising interest rates.