BRUSSELS: EU antitrust regulators are set to fine six global banks including Deutsche Bank, JPMorgan and HSBC for suspected rigging of benchmark eurozone interest rates, a person familiar with the matter said yesterday.
The penalties, which will also target Royal Bank of Scotland (RBS), Credit Agricole and Societe Generale , represent the first punishments meted out by Brussels in a global probe and are the latest costly payouts for an industry struggling to put past misdeeds behind it.
The move comes two years after the European Commission, the EU’s antitrust authority, raided a number of banks for suspected fixing of Euribor, a benchmark used as the basis for pricing ¤250 trillion ($338 trillion) worth of financial contracts, ranging from Spanish mortgages to complex derivatives.
Barclays, which alerted the European Commission to the suspected wrongdoing, will not be fined, the source said.
The penalties only relate to alleged manipulation of Euribor. Banks suspected of rigging London interbank offered rate or Libor could be fined next month when the Euribor penalties are announced, the source said.
Some of the banks had agreed to settle with the Commission in exchange for a 10 percent reduction in their fines, the source added. Several of the banks will not be fined immediately as they are contesting the size of the proposed penalties. HSBC, Europe’s largest bank, is one of those, two sources said. In these cases, the banks are likely to face formal charges next month, followed by fines next year, the source said.
RBS, Deutsche Bank, Societe Generale, JP Morgan and HSBC declined to comment. Credit Agricole was not immediately available to comment. Commission spokesman for competition policy, Antoine Colombani, also declined to comment.
The EU can impose fines of up to 10 percent of a company’s global revenue for breaches of antitrust rules. In this case, the fines are likely to be towards the low end of the scale, the source said. However, since all the banks have revenues of at least 16 billion euros a year, even a 1 percent fine would result in hundreds of millions of euros in penalties.
HSBC generated revenue of $63.5bn last year, while RBS’s total was £25.8bn, Societe Generale’s was ¤23.1bn, Deutsche Bank’s ¤33.5bn and Credit Agricole’s ¤16.3bn. JP Morgan’s revenue was $97bn.
The cost to banks could also mount if investors who believe they have lost money due to possible manipulation use the settlements to sue for damages.
Stephen Critchley, a senior associate at UK law firm Collyer Bristow, said if banks admit liability as part of a settlement it could open them up to being sued. “They stand to lose more than just the fines,” he said.
An English court is already considering whether attempted manipulation of Libor can invalidate loans and other contracts or show banks mis-sold products that were based on the rate.
Authorities in the US, Britain and elsewhere have so far fined five financial firms $3.7bn for manipulating Libor and its Euribor cousin. Reuters
