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A Lloyds bank branch sign is seen near St Paul's Cathedral in the City of London.

ANDREW WINNING/REUTERS

Britain's Lloyds Banking Group has received subpoenas from government agencies investigating a global interest rate rigging scandal that has rocked the banking industry and has not set any money aside to cover a potential fine, it said on Thursday.

Rival Barclays has been thrown into turmoil after being fined a record $453-million by U.S. and U.K. authorities for manipulating Libor interest rates. More than a dozen other banks are also being investigated and more fines are expected.

Lloyds, Britain's biggest retail bank, said in its 2011 annual report that it was a defendant in several Libor-related lawsuits. Research from Liberum Capital has suggested it could have to pay out up to £1.5-billion.

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"Certain members of the group have received subpoenas and requests for information from certain government agencies and are co-operating with their investigations," Lloyds said, while declining to give specific details.

On a conference call with reporters, Finance Director George Culmer said there was no need for the bank to set aside funds for potential litigation arising from the Libor affair.

"We are still part of an ongoing investigation and until the regulator is satisfied that that investigation is complete there is no point at this stage in thinking about or putting down a number," Mr. Culmer said.

The Libor interest rate is used as a benchmark in financial contracts worth hundreds of trillions of dollars. Barclays' chairman and chief executive have both resigned since the bank admitted its past involvement in manipulating the interest rate.

Lloyds also reported first-half results just ahead of expectations and said it had set aside another £700-million to compensate customers mis-sold insurance products – another scandal to have undermined trust in Britain's banks.

Compensation for mis-selling payment protection insurance (PPI) has now cost Lloyds some £1.075-billion this year, and £4.3-billion in total.

Lloyds said its underlying profit increased by £715-million to £1.064-billion in the first half, ahead of the average forecast of £1.03-billion, according to a poll of 20 analysts supplied by the company.

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The PPI hit dragged the bank to a statutory loss of £439-million.

"Although Lloyds is our preferred domestic play, reflecting its lack of exposure to investment banking, we retain a hold stance reflecting the considerable uncertainty relating macroeconomic environment, regulation, the political environment and litigation risk," said Shore Capital analyst Gary Greenwood.

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