Compliance

Three Big Banks Fined Over $520 Million By European Commission

Josh O'Neill Reporter 8 December 2016

Three Big Banks Fined Over $520 Million By European Commission

Three of the world's key banking players have been slapped with a hefty fine for rigging industry borrowing rates.

Crédit Agricole, HSBC and JP Morgan have been collectively fined €485 million ($520.4 million) by the European Commission for colluding to manipulate a key industry borrowing rate.

The three big banks breached EU antitrust rules by fixing Euribor, the Euro Interbank Offered Rate at which banks lend money to each other, and exchanged “sensitive information” as they bidded to make highly profitable trades, a five-year investigation conducted by the European Commission revealed.

The investigation unveiled a so-called cartel that was active between September 2005 and May 2008, involving a total of seven banks: Barclays, Crédit Agricole, HSBC, JP Morgan, Deutsche Bank, RBS and Société Générale. Each bank participated in the dodgy dealings for varying periods of time. The participants were in regular contact through corporate online chat rooms with the aim of distorting the normal course of pricing components for euro interest rate derivatives, such as forward rate agreements, interest rate swaps and interest rate options.  

However, the latest slap to the industry only concerns Crédit Agricole, HSBC and JP Morgan and does not involve the other banks mentioned above, as they reached a settlement with the European Commission in 2013 over their involvement in the process. 

Crédit Agricole was found to have been involved for a duration of five months and was consequently fined €114.7 million. HSBC's participation lasted one month, which perhaps reflects its lower penalty of €33.6 million. JP Morgan was involved for a five-month period and was hit with the heaviest fine, totalling €337.2 million.

“A sound and competitive financial sector is essential for investment and growth,” said commissioner Margrethe Vestager, who is in charge of competition policy. “Banks have to respect EU competition rules just like any other company operating in the Single Market." 

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