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EU fine of $2bn on 8 banks for rate fixing

London, Dec. 4: The European Union has fined eight banks a combined 1.7 billion euros ($2.3 billion) in a historic accord over alleged collusion to fix two benchmark interest rates.

The settlement announced by the EU antitrust officials on Wednesday, relates to alleged actions by traders at some of the world’s largest banks, including Citigroup, Royal Bank of Scotland and Deutsche Bank. The banks were accused of fixing rates for the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.

“The commission is determined to fight these cartels in the financial sector,” said JoaquíAlmunia, the EU’s competition commissioner, at a news conference in Brussels.

The penalties come after five financial institutions, including Barclays, RBS and UBS, previously admitted wrongdoing and agreed to pay more than $3 billion combined to regulators in the US, Britain and Switzerland over collusion to fix the Libor rate.

The EU antitrust authorities were not part of those previous settlements and conducted their own investigation.

The agreement marks the first time that American banks Citigroup and J.P. Morgan Chase will pay penalties in the rate-fixing investigations.

Barclays and UBS, which alerted EU officials to the improper practices, will avoid fines as part of the settlement. Citigroup, which will pay a total of 70 million euros in fines, also avoided a 55 million euros penalty by co-operating with investigators.

The banks that agreed to settle received a 10 per cent reduction in the total amount of fines they could have faced, EU officials said.

The fine exceeds a 1.47-billion euros penalty levied last year against seven companies over collusion in the manufacturing of cathode-ray tubes for computer monitors and televisions.

The banks that reached settlements related to Euribor are: Barclays, Deutsche Bank, RBS and Société Géérale. The improper activity took place between September 2005 and May 2008, officials said.

Alumnia said the antitrust regulators had opened investigations of HSBC, J.P. Morgan and Crédit Agricole related to Euribor.

The banks that reached settlements related to yen Libor are: UBS, RBS, Deutsche Bank, J.P. Morgan and Citigroup. The British broker RP Martin also agreed to a fine over Yen Libor. The improper activity took place between 2007 and 2010, officials said.

 
 
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