EU fines global lenders US$2.3b for rate fiddle
Print Edition
The European Commission has fined a group of major global banks a total of 1.7 billion euros (US$2.3 billion) for colluding to profit from the manipulation of key interest rates.
The banks, which include JPMorgan, Citigroup and HSBC, are accused of manipulating for years European and Japanese benchmark interest rates that affect hundreds of billions of dollars in contracts globally, from mortgages to credit card bills.
The commission, the European Union’s executive arm, is only the latest to punish banks for profiting from manipulating interest rates, after similar cases brought by US and national European market regulators.
“We want to send a clear message that we are determined to find and punish these cartels,” competition commissioner Joaquin Almunia said yesterday.
The banks named as participating in cartels were Barclays, Deutsche Bank, Royal Bank of Scotland, Societe Generale, Credit Agricole, HSBC, JPMorgan, UBS and Citigroup.
In a first cartel, which operated from 2005 to 2008 and focused on euro-denominated derivatives, Deutsche Bank received the largest fine, of 468 million euros, followed by Societe Generale with 445 million euros. RBS was fined 131 million euros.
Barclays escaped a 690-million-euro fine because it was the bank that notified the commission of the cartel’s existence, while JPMorgan, HSBC and Credit Agricole have as yet not settled. JPMorgan and HSBC denied wrongdoing yesterday, though JPMorgan settled with the commission in the case of a second cartel, which operated from 2007 to 2010 and focused on yen-based derivatives.
“This is not the end of the story,” Almunia said. He noted that further investigations are possible and the commission is also probing a cartel it believes manipulated derivatives denominated in Swiss francs.
In a response to the fine, Deutsche Bank Chief Executive Juergen Fitschen referred to the euro cartel as a “legacy issue” caused by “past practices of individuals” at the bank. Fitschen has worked there since 1987 and became CEO in 2012. He admitted participating in the cartel had been a “gross violation” of the bank’s ethics.
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