BBA overhaul Libor system

June 10 (Bloomberg) -- The British Bankers' Association,yielding to pressure from investors and regulators, willincrease the number of banks that set the London interbankoffered rate in the biggest change to Libor in a decade. The London-based trade group will also ``take soundings''on adding a second survey of members to reflect U.S. tradinghours when it sets the global benchmark rate, it said today inan e-mailed statement. Libor, used to calculate rates on $360trillion of financial products from company bonds andderivatives to U.S. mortgages, was last changed in 1998. The BBA, which holds its annual banking conference inLondon today, has been urged to overhaul the 24-year-old system since the Bank for International Settlements said in a March report some members may have understated their rates to avoid being seen as having difficulty raising financing. The changes will boost the ``confidence of its many users,'' the BBA said. The BBA, which isn't regulated, asks member banks oncea day how much it would cost then to borrow from each otherfor 15 different periods, from overnight to one year, incurrencies from dollars to euros and yen. It then calculatesaverages, throwing out the four highest and lowest quotes, andpublishes them at about 11:30 a.m. in London. Sixteen bankscontribute to the setting, three of which are U.S.-based. Banks routinely misstated borrowing costs to the BBA toavoid the perception they faced difficulty raising funds ascredit markets seized up, turning Libor into ``a lie,''according to Tim Bond, head of asset allocation at BarclaysCapital, a unit of Barclays Plc.