(Adds details, background, market reaction)
By Kirsten Donovan
LONDON, June 19 (Reuters) - The British Bankers' Association told Reuters on Friday it has no target number of additional banks that may join the panels that participate in the fixing of London interbank offered rates (Libor).
The BBA had said on Thursday it planned changes to the definition of its Libor rates -- the benchmark for more than $350 trillion of financial products and the world's most widely tracked interest rates -- to allow a greater number of firms to take part in the process if they wanted. [ID:nLI301653]
BBA spokesman Brian Mairs told Reuters on Friday that any banks admitted to the panels would still have to be a "material participant" in the London money market and would have to submit prices for a period of time before joining the panel.
Libor rates represent the average cost at which a panel of banks believe they can borrow funds for various periods of time in various currencies.
The planned change to the BBA rate survey had spurred concern in financial markets that smaller, less creditworthy banks would enter the Libor rate-setting process, raising the cost of borrowing money, particularly in dollars, for all banks that use Libor.
Those concerns contributed to a seven basis point widening
in two-year U.S. interest rate swap spreads on Thursday and a
rise in the dollar against the euro
Critics of the BBA said last year the fixings did not fully reflect the cost that some banks were facing to raise funds as the global credit crisis intensified.
The BBA said in June 2008 it would expand the number of contributors to its Libor rates to boost confidence in the fixings processes.
The announcement, officially made on Friday, of changes to the eligibility criteria were intended to pave the way for this, the BBA said.
For the full text of the BBA's technical note on the change in its definition of Libor, please click on [ID:nLJ240714]