EU fines six banks $2.3 bn for benchmark rigging

Penalty is the biggest yet to be handed down to banks for rate-rigging.

Written by Reuters | Brussels | Published: December 5, 2013 12:59 am

A group of leading EU antitrust regulators fined six financial institutions including Deutsche Bank,Royal Bank of Scotland and Citigroup a record total of euro 1.71 billion ($2.3 billion) on Wednesday 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 euro 725.36 million. 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 euro 725 million fine.

RBS said its euro 391 million penalty had been fully provisioned for. JPMorgan confirmed its euro 79.9 million 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 10 per cent 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. Both banks are expected to be formally charged on Wednesday.

The banks

* Six financial institutions fined including Deutsche Bank,Royal Bank of Scotland,Citigroup,Societe Generale,JPMorgan and brokerage RP Martin

* Deutsche Bank received the biggest fine of euro 725.36 mn

* The European Commission will investigate Credit Agricole,HSBC,JPMorgan and ICAP

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