Serious Fraud Office confirms it is considering whether criminal charges over LIBOR are "appropriate and possible"

"Now that the investigation into the issue of regulatory misbehaviour has concluded, the SFO are considering whether it is both appropriate and possible to bring criminal prosecutions," it said in a statement. "The issues are complex and the assessment of the evidence the [Financial Services Authority] has gathered will take a short time, but we hope to come to a conclusion within a month."

The SFO has the power to investigate and prosecute individuals for corrupt or fraudulent activity in England, Wales and Northern Ireland. It had, it said, been "working closely" with banking watchdog the Financial Services Authority (FSA) during its investigations regarding the London Interbank Offered Rate (LIBOR), and was "working with the relevant authorities" in other jurisdictions in which investigations remain ongoing.

Earlier today Bob Diamond resigned as chief executive of Barclays Bank with immediate effect. The bank announced last week that it had entered into settlement agreements worth £290 million with UK and US regulators for "misconduct" in relation to its contributions to LIBOR and its euro equivalent, EURIBOR.

LIBOR is a daily reference rate based on the interest rates at which banks can borrow unsecured funds from other banks. It is widely used as the basis for financial instruments including interest rate and currency hedging instruments, and to set the interest rate for syndicated loans. Contributing banks submit their rates directly to business data provider Thomson Reuters, which carries out the calculation and publishes LIBOR rates in 10 currencies at midday every London business day.

Chancellor of the Exchequer George Osborne yesterday announced a review of the current framework for setting and governing LIBOR, to be conducted by chief executive-designate of the new Financial Conduct Authority (FCA), Martin Wheatley. The FCA is due to take on the conduct and compliance functions of the FSA when the regulator is ultimately disbanded by the draft Financial Services Bill. As part of his review, Wheatley will consider the adequacy of existing civil and criminal sanctioning powers with respect to financial misconduct or market abuse in relation to LIBOR.

The FSA is not currently able to pursue criminal sanctions in relation to LIBOR due to the nature of its powers, Osborne said. However, the SFO could potentially investigate whether bankers acted in breach of the Fraud Act or whether they broke laws in relation to false accounting.

Wheatley's review will also consider whether the supplying of interest rates to be considered in the setting of the daily LIBOR rate should become a regulated activity, and whether banks should be forced to submit actual trade data rather than being able to rely on estimates.

Osborne also announced the inclusion of amendments in the Financial Services Bill to ensure that fines paid to regulators by the financial services industry will be delivered directly to the Exchequer, rather than being used to reduce the annual levy imposed on other financial institutions as at present. The new arrangement will, he said, apply to fines received from 1 April this year "so that it includes the Barclays penalty". The bank was fined £59.5m by the FSA.

In addition Conservative MP Andrew Tyrie, who currently heads the House of Commons Treasury Select Committee, will chair a joint committee on professional standards in the banking industry, due to report by the end of the year. This committee's recommendations could be reflected in the upcoming Banking Reform Bill, which will deliver wide-ranging reforms to the banking industry including the 'ring fencing' of the retail activities of large banks from their investment activities.

"The behaviour of some in the financial services has damaged the reputation of an industry that employs hundreds of thousands of people and is vital to the economic prosperity of the country," Osborne said in a statement to Parliament. "We're changing the failed regulation; reforming the banks; now it's time to deal with the culture that flourished in the age of irresponsibility and hold those who allowed it to do so to account."