Monday 23 April 2018

EU Commission to fine banks €1.7bn for benchmark rigging

EU antitrust regulators fined six financial institutions including Deutsche Bank, Royal Bank of Scotland and Citigroup a record total of €1.71bn today for rigging financial benchmarks.

The penalty is the biggest yet to be handed down to banks for rigging the benchmarks used to determine the cost of lending, one of the most brazen violations of conduct since the financial crisis. It is also the highest antitrust penalty ever imposed by the Commission, the EU's competition regulator.

The other banks penalised are Societe Generale, JPMorgan and brokerage RP Martin.

Deutsche Bank received the biggest fine of €725.36m.

The European Commission said it would continue to investigate Credit Agricole, HSBC, JPMorgan and brokerage ICAP for similar offences.

The benchmarks involved are the London interbank offered rate, or Libor, the Tokyo interbank offered rate and the euro area equivalents. They are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.

"What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other," EU Competition Commissioner Joaquin Almunia said in a statement.


RP Martin and ICAP could not be immediately reached for comment. Deutsche Bank said it has set aside enough money to cover most of the €725m fine.

JPMorgan confirmed its €79.9m penalty in the Libor case but said it would defend itself in the Euribor case. . Societe Generale declined to comment.

Unlike the six banks which admitted liability in return for a 10pc reduction in their fines, Credit Agricole has refused to settle and will likely face sanctions next year. HSBC has also contested the EU's proposed penalty.

A spokesman for HSBC said the bank would defend itself vigorously in the Euribor case, while Barclays confirmed its cooperation with the Commission which helped it stave off a €690m sanction.

RBS said its €391m penalty had been fully provisioned for.

Authorities around the world have so far handed down a total of $3.7bn in fines to UBS, RBS, Barclays, Rabobank and ICAP for manipulating rates, while seven individuals face criminal charges.

UBS paid a record fine of $1.5bn late last year to the US Department of Justice and the UK's Financial Services Authority for rate-rigging.

EU fines can reach up to 10pc of a company's global turnover.

UBS blew the whistle on the Libor and Tibor cases and will not be fined as a result. Barclays will escape a fine in the Euribor case because it alerted the Commission to the offence.





Online Editors

Business Newsletter

Read the leading stories from the world of Business.

Also in Business