EU Commission fines banks 1.7 bln euros for benchmark rigging

Reuters

By Foo Yun Chee

BRUSSELS, Dec 4 (Reuters) - EU antitrust regulators vowed tokeep investigating rate- rigging on Wednesday as they slapped arecord 1.7 billion euro ($2.3 billion) penalty on six financialinstitutions including Deutsche Bank, RBS andJPMorgan.

The fines by the Commission, which along with authoritiesaround the globe has been examining the manipulation of Londoninterbank offered rate (Libor) and its euro equivalent Euribor, takes the tally of penalties related to the scandal to almost $6billion.

Confirming what a source familiar with the matter hadpreviously told Reuters, EU Competition Commissioner JoaquinAlmunia said he had been shocked at the scale of the scam andwas sending a clear message that Brussels would fight and imposesanctions on cartels.

Deutsche Bank, which has yet to be fined by U.S. and UKregulators as part of separate investigations into benchmarkinterest-rate fixing, received the highest fine of 725.4 millioneuros.

Germany's largest lender and RBS were fined for theirinvolvement in both the Euribor and Libor cartels.

Also fined were JPMorgan and Citigroup, France'sSociete Generale and UK-based brokerage RP Martin.

Swiss bank UBS and Britain's Barclays avoided fines of 2.5 billion euros and 690 million respectivelyfor revealing the existence of the cartel.

U.S. and French banks were penalised for the first time in ascandal in which traders fiddled rates used as a reference pointto price around $400 trillion worth of products worldwide, fromderivatives to mortgages and student loans.

Some banks declined to settle with the EU. France's CreditAgricole and UK-based HSBC are disputingallegations, while the role played by UK-based brokerage ICAP remains under investigation.

JPMorgan has only settled allegations relating toyen-denominated Libor, not Euribor.

Almunia said the Commission would continue to investigatecollusion allegations in other benchmarks, including the SwissFranc currency and foreign exchange markets.

"This will not be the end of the story, neither for interestrate derivatives nor for the manipulation of benchmarks,"Almunia told a Brussels news conference.

"And one of the areas where, as you know, we have receivedsome elements of information that we are looking at very, verycarefully is forex, forex markets and the relations with forexbenchmarks."

SOBERING REMINDER

RBS Chairman Philip Hampton said the bank's board and newmanagement team condemned the behaviour of individuals involvedin rate rigging.

"Today is another sobering reminder of those past failingsand nobody should be in any doubt about how seriously we havetaken this issue," Hampton said.

Deutsche Bank said it had already set aside enough money tocover the costs of the fine, while JPMorgan and HSBC vowed tovigorously defend themselves over Euribor allegations. ICAP, RPMartin and Societe Generale declined comment.

Banks that have settled the EU allegations qualified for a10 percent reduction in their fines.

Authorities around the world have so far handed down a totalof $3.7 billion in fines to UBS, RBS, Barclays, Rabobank andICAP for manipulating rates, while seven individuals facecriminal charges.

UBS paid a record fine of $1.5 billion late last year toU.S. and UK regulators for rate-rigging.

EU fines in such instances can reach up to 10 percent of acompany's global turnover.

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