A former UBS and Citigroup banker and two others had their homes raided early on Tuesday morning and were taken in for questioning as part of the Serious Fraud Office investigation into the manipulation of Libor interest rates.

The intervention came amid mounting speculation that the Financial Services Authority is preparing to take action against a number of banks in relation to Libor setting.

The SFO and City of London police arrested three men aged 33, 41 and 47 after searching a house in Surrey and two properties in Essex. The three were taken to a London police station to be interviewed "in connection with the investigation into the manipulation of Libor".