EU
Commission fines banks 1.7 billion euros for benchmark rigging
Reuters - EU antitrust regulators vowed to
keep investigating rate-rigging on Wednesday as they slapped a record 1.7
billion euro (1.4 billion pounds) penalty on six financial institutions
including Deutsche Bank, RBS and JPMorgan.
The fines by the Commission,
which along with authorities around the globe has been examining the
manipulation of London interbank offered rate (Libor) and its euro equivalent
Euribor, takes the tally of penalties related to the scandal to almost $6
billion (3 billion pounds).
Confirming what a source
familiar with the matter had previously told Reuters, EU Competition
Commissioner Joaquin Almunia said he had been shocked at the scale of the scam
and was sending a clear message that Brussels would fight and impose sanctions
on cartels.
Deutsche Bank, which has yet
to be fined by U.S. and UK regulators as part of separate investigations into
benchmark interest-rate fixing, received the highest fine of 725.4 million
euros.
Germany's largest lender and RBS were fined for their
involvement in both the Euribor and Libor cartels.
Swiss bank UBS and Britain's
Barclays avoided fines of 2.5 billion euros and 690 million respectively for
revealing the existence of the cartel.
U.S. and French banks were
penalised for the first time in a scandal in which traders fiddled rates used
as a reference point to price around $400 trillion worth of products worldwide,
from derivatives to mortgages and student loans.
Some banks declined to settle
with the EU. France's Credit Agricole and UK-based HSBC are disputing
allegations, while the role played by UK-based brokerage ICAP remains under
investigation.
JPMorgan has only settled
allegations relating to yen-denominated Libor, not Euribor.
Almunia said the Commission
would continue to investigate collusion allegations in other benchmarks,
including the Swiss Franc currency and foreign exchange markets.
"This will not be the end
of the story, neither for interest rate derivatives nor for the manipulation of
benchmarks," Almunia told a Brussels news conference.
"And one of the areas
where, as you know, we have received some elements of information that we are
looking at very, very carefully is forex, forex markets and the relations with
forex benchmarks."
SOBERING REMINDER
RBS Chairman Philip Hampton
said the bank's board and new management team condemned the behaviour of
individuals involved in rate rigging.
"Today is another
sobering reminder of those past failings and nobody should be in any doubt
about how seriously we have taken this issue," Hampton said.
Deutsche Bank said it had
already set aside enough money to cover the costs of the fine, while JPMorgan
and HSBC vowed to vigorously defend themselves over Euribor allegations. ICAP,
RP Martin and Societe Generale declined comment.
Banks that have settled the EU
allegations qualified for a 10 percent reduction in their fines.
Authorities around the world have
so far handed down a total of $3.7 billion in fines to UBS, RBS, Barclays,
Rabobank and ICAP for manipulating rates, while seven individuals face criminal
charges.
UBS paid a record fine of $1.5
billion late last year to U.S. and UK regulators for rate-rigging.
EU fines in such instances can
reach up to 10 percent of a company's global turnover.