David Green QC, director of the SFO, said existing legislation could be used to bring criminal actions against banks implicated in the Libor rigging scandal.
Mr Green did not specify the precise charges that could be brought but it is possible bankers found guilty of manipulation could receive prison sentences of up to 10 years, reports The Telegraph.
The decision to pursue prosecutions comes just over three weeks after the SFO formally announced an investigation into Libor and in particular whether it was possible to launch criminal proceedings against individual banks and bankers found to have rigged borrowing rates.
In a statement the SFO said it was “satisfied that existing criminal offences are capable of covering conduct in relation to the alleged manipulation of Libor and related interest rates”.
The SFO has not said which banks are being investigated, but has confirmed that it is looking into “a number of financial institutions”.
However, it is highly likely that major British lenders, including Barclays, Lloyds Banking Group and Royal Bank of Scotland, which are already the subject of several international investigations, are among the institutions being looked at by the SFO.
On top of the official probes, banks are also facing separate lawsuits related to Libor rigging.
New York lender, Berkshire Bank, has filed court papers against several larger banks, including Barclays, JP Morgan and Citigroup, claiming they had engaged in the “unlawful suppression” of borrowing rates.
Berkshire Bank, which has assets of $854m (£542m) and 10 branches, is seeking to turn its case into a class-action so that other smaller lenders can join in.
Martin Wheatley, head of financial conduct at the Financial Services Authority, yesterday launched a review into the Libor setting process that could lead to it being regulated by the authorities.
Mr Wheatley is expected to complete his report by the end of the summer and his recommendations will be used to make amendments to the new Financial Services Bill, which is currently being scrutinised by the House of Lords.
“It is clear that urgent reform of the Libor compilation process is required,” said Mr Wheatley.
At present, Libor rates are published under the auspices of the British Bankers’ Association, the lobby group for the UK banking industry. However, this process has come under fire in the wake of the revelations over the way banks were able to enter false submissions following Barclays’ admission that it had entered artificially low rates.