EU Commission to fine banks $2.3 billion for benchmark rigging
BRUSSELS – A group of leading European and American banks will be fined a record 1.7 billion euros ($2.3 billion) by the European Commission for the rigging of interest-rate benchmarks, a source familiar with the matter told Reuters on Wednesday.
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 seen during the financial crisis.
The banks to be fined are Citigroup (C.N), Deutsche Bank (DBKGn.DE), Royal Bank of Scotland (RBS.L), JPMorgan (JPM.N), Barclays (BARC.L) and Societe Generale (SOGN.PA), sources have said.
“The total fine is 1.7 billion euros,” the person said. If the figure is upheld, it would be the highest antitrust penalty ever imposed by the Commission, the EU’s competition regulator.
Commission spokesman for competition policy, Antoine Colombani, declined to comment.
The benchmarks involved are the London interbank offered rate 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.
Unlike the six banks which admitted liability in return for a 10 percent reduction in their fines, Credit Agricole (CAGR.PA) has refused to settle and will likely face sanctions next year. A person familiar with the matter said HSBC (HSBA.L) has also contested the EU’s proposed penalty.
Both banks are expected to be formally charged on Wednesday. The EU’s competition commissioner, Joaquin Almunia, will announce the sanctions at a press conference at 1030 GMT.
Authorities around the world have so far handed down a total of $3.7 billion in fines to UBS, RBS, Barclays, Rabobank and broker ICAP for manipulating rates, while seven individuals face criminal charges.
UBS paid a record fine of $1.5 billion late last year to the U.S. Department of Justice and the UK’s Financial Services Authority for rate-rigging. For a factbox on the biggest fines handed down to banks.
EU fines can reach up to 10 percent of a company’s global turnover.
UBS blew the whistle on the Libor and Tibor cases and will not be fined as a result. Barclays will escape a fine in the Euribor case because it alerted the Commission to the offence.