TOKYO (Reuters) - Japan's banking industry group said on Friday it will tighten monitoring of how its interbank lending rates are set, responding to growing public distrust in benchmark rates around the world in the wake of rate-rigging scandals.
The Japanese Bankers Association said it will set up an independent monitoring body to oversee the operation of the Tokyo interbank offered rate (Tibor) and hire outside auditors to improve the transparency on how the benchmark rates are set.
The industry group set up a committee in April to review the operation of Tibor in the wake of global investigations into manipulation of benchmark rates such as Libor and Euribor.
The scandals have raised questions about how these benchmark rates are set, prompting authorities and banking industry bodies worldwide to overhaul rate-setting processes. For Tibor, no case of rate manipulation has been found so far.
Currently, 15 banks including major Japanese banks and BNP Paribas are reference banks for Japanese yen Tibor, and 14 banks including JPMorgan Chase and Deutsche Bank submit rates for euro yen Tibor, according to the association's website.
In the rate-rigging scandal involving Libor, U.S. and UK regulators so far have fined three banks, including Switzerland's UBS, a total $2.6 billion for their role.
Allegations of rate manipulation have spread to Asian interbank markets.
Last month, the Monetary Authority of Singapore (MAS) said traders from 20 banks, including HSBC <HSBA.L>, had tried to inappropriately influence benchmark rates in the Southeast Asian city-state.
The Hong Kong Monetary Authority (HKMA) also said it was investigating HSBC, UBS and a number of other banks about possible misconduct relating to its submissions for the Hong Kong Interbank Offered Rate (Hibor).
(Reporting by Taiga Uranaka and Shinichi Saoshiro; Editing by Edmund Klamann & Kim CXOghill)