Banks fined record £1.4bn over rate rigging scandal

 

The European Commission has fined five international banks, including Royal Bank of Scotland, and a broker a record 1.7 billion euros (£1.4 billion) for rigging crucial interest rate benchmarks.

Competition commissioner Joaquin Almunia said: “What is shocking about the Libor and Euribor scandals is not only the manipulation of the benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between the banks which are supposed to be competing with each other.”

Almunia, pictured, added: “If you take the opportunity to see the conversation between these cartel traders you will be appalled.”

RBS, the taxpayer-controlled bank, has been fined  391 million euros. That is on top of the £390 million it paid to UK and US regulators earlier this year.

Barclays, which was fined £290 million last year and saw the resignations of its chief executive Bob Diamond and chairman Marcus Agius over the Libor-rigging scandal, escaped a European fine because, along with UBS, it acted as a whistleblower to the commission.

If it had not done so it would have been fined  690 million euros and UBS  2.5 billion euros. The Swiss bank has already paid the equivalent of $1.5 billion (£915 million) in fines of rate rigging.

Deutsche Bank landed the largest EC fine of 725 million euros. France’s Société Générale was fined  446 million euros. JPMorgan has to pay  80 million euros, Citigroup  70 million euros and London broker RP Martin  247,000 euros. Today’s fines take the total imposed by UK, US and European regulators to $6 billion.

Almunia said: “Today’s decision sends a clear message that the commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few.”

The benchmarks involved were the Yen London interbank rate and Euribor. These rates are used to price assets running into hundreds of trillions of dollars ranging from derivatives to mortgages.

Three banks — HSBC, Credit Agricole and JPMorgan — rejected the commission’s offer to settle early on the Euribor case and London broker ICAP  on the Yen case. All face formal antitrust charges which could lead to larger fines.

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