LLOYDS Banking Group is to pay fines totalling £218 million to UK and US authorities after it became the latest lender to be punished over the rigging of interest rate benchmarks.

The group said the manipulation t ook place between May 2006 and 2009, adding that those involved h ave either left the group, been suspended or are subject to disciplinary proceedings.

Barclays was the first to settle Libor rate-rigging claims, paying £290 million in penalties to US and UK regulators in June 2012, while state-backed Royal Bank of Scotland was hit with a £391 million settlement.

Around £70 million of the fine from the UK's Financial Conduct Authority (FCA) relates to attempts by Lloyds to manipulate the fees payable to the Bank of England for participation in a taxpayer-backed government scheme designed to support the UK's banks during the financial crisis.

The £105 million total fine from the FCA is the joint third highest ever imposed by the regulator or its predecessor, the Financial Services Authority, and the seventh penalty for Libor-related failures.

Whilst the Libor misconduct is similar to other institutions, the rigging of the Bank of England's Special Liquidity Scheme (SLS) has not been seen before.

Lloyds will pay the Bank £7.8 million in compensation for the reduction in the amount of fees received by the central bank as a result of the manipulation.

Tracey McDermott, the FCA's director of enforcement and financial crime, said: " The firms were a significant beneficiary of financial assistance from the Bank of England through the SLS.

"Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable. This falls well short of the standards the FCA and the market is entitled to expect from regulated firms."

She said the abuse of the SLS was a novel feature of the case but that the conduct and the underlying failings were not new.

Lloyds said the actions of those responsible were " totally unacceptable and unrepresentative of the cultural changes that the group has implemented".

In a letter to Bank of England governor Mark Carney earlier this month, Lloyds chairman Lord Blackwell wrote: "This was truly shocking conduct, undertaken when the Bank was on a lifeline of public support."

As part of the settlements on Libor rigging, Lloyds will pay £35 million to the FCA and £62 million and £51 million respectively to the US Commodity Futures Trading Commission and the Department of Justice.

The FCA said it concluded that four individuals manipulated the Repo Rate, which was used by the Bank of England to calculate the fees for the SLS, between April 2008 and September 2009.

During the period that Lloyds TSB and HBOS used the SLS, they paid £1.28 billion in fees, just under half paid by the industry under SLS.

The scheme allowed banks to swap illiquid, mortgage-backed securities for highly liquid UK Treasury Bills which could be used to raise cash as and when required.

Participating banks were charged a fee by the Bank of England, based on the spread between the three-month Libor and three-month Repo Rate, with a narrower spread resulting in a smaller fee and vice versa.

The fee was intended to make the overall cost of SLS funding comparable with commercial borrowing.

Lloyds Banking Group was formed in 2009 when Lloyds TSB acquired HBOS.

In October 2008, the FCA said that in order to avoid negative media comment and market perception about its financial strength, Bank of Scotland manipulated its sterling and US dollar Libor submissions as a result of at least two management directives.

The watchdog added there was a culture on money market desks of seeking to take a financial advantage wherever possible.

The FCA quoted an example in July 2007 when a Lloyds manager was informed by a Lloyds trader about a request made to another Lloyds trader for a low Japanese yen Libor.

The Lloyds trader commented that "every little helps ... It's like Tescos". The Lloyds manager replied "Absolutely, every little helps."

© Press Association 2014