How Will the Libor Scandal Affect London?

The Libor rate-rigging scandal has had an adverse effect on London’s reputation as a leading financial center, Mark Boleat, policy chairman at the City of London Corporation, told CNBC.

On Wednesday, The Japan Bank for International Cooperation (JBIC) dropped Barclays from a major Japanese bond deal after it admitted fixing Liborrates.

It marked the first time the bank has lost business due to the scandal.

“This is a very big blow for Barclays, it's a blow for banks, it's a blow for London, It’s a question of how much.“ he told CNBC’s “Worldwide Exchange”.

Boleat believes that the rate-fixing may not be confined to Barclays, or London, but because they are the first to be fined it’s causing reputational damage.

“The people who work for banks are really concerned when everybody gets criticized for what’s been done by a very small number of people,” he said.

He conceded that people may not necessarily be deterred from doing businesses in London but stressed that people wanted to see action being taken to deal with the problems.

On Wednesday evening the Lord Mayor of the City of London lambasted those individuals that manipulated the key rate. Speaking at an event at Mansion House in London he said: “Firm action must be taken against those who let the country and the City down.”

These comments come as the UK Parliament announced further evidence sessions on Libor-rigging. Former Barclays chief operating officer Jerry del Missier is due to appear on Monday at the Treasury Select Committee, along with representatives from the Financial Services Authority.

On Friday, the Federal Reserve Bank of New York is set to release documents detailing the action it took four years ago to highlight the problems with Libor.