Labour last night sought to make political capital over Treasury Financial Secretary Sajid Javid's senior role at Deutsche Bank during the period when the EU found the bank was one eight institutions engaged in cartels that conspired to manipulate European euribor and Japanese yen Libor interest rates.
European Commission watchdogs yesterday imposed fines totalling €1.7bn (£1.4bn) on six of the eight, including Royal Bank of Scotland.
RBS was ordered to pay €391m for involvement in both but that was dwarfed by the penalty imposed on Deutsche, which will have to pay €725.4m. The remainder of the €1.7bn total was shared between JPMorgan, Citigroup and broker RP Martin (yen) along with Société Générale (euribor). Barclays, which flagged the Euribor cartel to watchdogs and UBS which alerted to the commission to the yen cartel, were exempted for acting as whistleblowers. They ducked fines of €690m and €2.5bn respectively.
In a letter to Mr Javid, Labour's Treasury minister Cathy Jamieson demanded that he clarify what he knew about the affair while at Deutsche Bank.
In the letter she said: "It is of course in the public domain that prior to being elected as an MP, you held senior positions at Deutsche Bank during the period that the commission's investigations and findings cover.
"Given your current role as Financial Secretary to the Treasury, and your former role as Economic Secretary to the Treasury, I am sure that you would wish to be open about any meetings and discussions that have taken place which relate to this issue."
Mr Javid worked at Deutsche between 2000 and 2009, initially as a director and later as a managing director, focusing on emerging markets.
The commission said it had acted even in the wake of heavy fines levied by financial regulators because the case involved "collusion between competitors in derivatives markets". Joaquín Almunia, the Competition Commissioner commission Vice-President in charge of competition policy, said: "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.
"Today's decision sends a clear message that the commission is determined to fight and sanction these cartels in the financial sector."
HSBC and French bank Crédit Agricole remain under investigation and are fighting attempts to fine them while JP is battling regulators over the Euribor part of the case.
RBS chairman Sir Philip Hampton described his bank's fine as "a sobering reminder of past failings". "The RBS board and new management team condemn the behaviour of the individuals who were involved in these activities. There is no place for it at RBS," he said.
Dominic Hook, Unite national officer, said: "It will be appalling if the guilty banks attempt to recoup these fines by making frontline staff pay."