Major banks fined 1.7bn euros for rate fixing
Eight banks, including RBS, are fined a record 1.7bn euros for colluding to rig interest rates, but Barclays escapes punishment after blowing the whistle on the practice.
The institutions formed illegal cartels to fix inter-bank lending rates, known as Libor and Euribor, which are used to set the price of financial products including mortgages.
Deutsche Bank will pay the heaviest fine of 725m euros, Societe Generale 446m euros and RBS 391m euros.
Barclays faced a 690m euro fine, but this penalty was withdrawn because the bank alerted the authorities to the existence of the Euribor cartel.
The sanctions – the first time the European Commission has fined banks for rate manipulation – are the highest yet for European anti-trust enforcement.
RBS, majority owned by the taxpayer since the 2008-09 banking crisis, is still recovering from a major IT failure that left customers unable to access their money.
In November, the bank was accused of deliberately driving small businesses to the wall so it could take over their assets.
Royal Bank of Scotland was involved in the Libor and Euribor cartels. RBS and Barclays have already been fined by regulators in the UK and US following an investigation into the rigging of Libor. RBS was fined £391m and Barclays £290m.
‘Serious shortcomings in our systems’
Sir Philip Hampton, chairman of RBS, said the bank’s senior management “condemn the behaviour” of those involved in attempted rate rigging.
He added: “We acknowledged back in February that there were serious shortcomings in our systems and controls on this issue, but also in the integrity of a very small number of our employees.
“Today is another sobering reminder of those past failings and nobody should be in any doubt about how seriously we have taken this issue.”
The European Commission fined Deutsche Bank and Societe Generale in relation to Euribor. As well as RBS, those involved in the Libor case were UBS, Deutsche Bank, JPMorgan Chase & Co, Citigroup and UK-based wholesale broker RP Martin.
UBS avoided a huge 2.5bn euro fine after telling the commission about the Libor collusion.
British bank HSBC is understood to have pulled out of the Euribor settlement talks with European regulators, alongside JPMorgan Chase & Co and Credit Agricole, while broker ICAP is said to have refused settlement in the Libor probe.
‘Defend ourselves vigorously’
The European Commission will continue its investigation into alleged cartels, but an HSBC spokesman said: “We intend to defend ourselves vigorously.”
Joaquin Almunia, 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. Enforcing competition rules can help ensure that financial markets truly work at the service of the real economy, and not in the interests of the few.”
Barclays was the first bank to be caught up in the Libor scandal, which caused the resignation of former chief executive Bob Diamond and led to a major overhaul of practices and culture in the bank.
Barclays said it “voluntarily” reported the Euribor cartel to the commission and “co-operated fully” with the investigation.