4.3 Behind the headlines

Question 1

How much did the PPI scandal cost the banks?

Answer 1

£29.2 billion as of January 2018

Question 2

What is the London interbank offered rate (Libor)?

Answer 2

The interest rate that banks pay when they borrow from and lend to each other

Question 3

Why were banks fined in relation to Libor?

Answer 3

• People working in the banks’ trading departments had taken steps to fix the interest rate by falsifying the information on which Libor is based
• They pushed Libor up or down, depending on circumstances, so that they would gain from trades they made (known as market rigging)

Question 4

Why did it have an impact on other institutions, such as pension funds, when trades fixed Libor to be a little lower so that they could borrow more cheaply?

Answer 4

Institutions such as pension funds earned a lower return than they would have done

Question 5

Details of 2013 RBS computer error:

Answer 5

They had a computer error on Cyber Monday which meant that millions of customers could not use credit and debit cards for three hours

Question 6

What was the biggest computer problem experienced by a UK bank?

Answer 6

Glitch of 2012, during which 13 million customers of RBS, NatWest and Ulster bank could not be certain how much money they had in their accounts