5 Dec 2013

Cartel banks fined 1.7b euros for rigging rates

9:19 am on 5 December 2013

The European Commission has fined eight banks a total of 1.7 billion euros for forming illegal cartels to rig interest rates.

The cartels operated in markets for financial derivatives, which are products used to manage the risk of interest rate movements.

Commission vice president Joaquin Almunia said it was shocking that competing banks were in collusion.

Two of the eight were excused their financial penalties for revealing the cartels' existence.

UBS and Barclays stood to pay the largest fines of 2.5 billion euros and 690 million euros, but avoided paying anything because they assisted the investigation.

The BBC reports a number of banks were engaged in the rigging of interest rate products intended to reflect the cost of interbank lending in euros, while another group fixed prices for products based on the Japanese yen. Some were involved in both markets.

Other organisations involved were Deutsche Bank, which received the biggest fine of 725.36 million euros, Societe Generale, JP Morgan, Citibank and the brokers RP Martin.

The BBC says banks that have not yet settled fines but are being investigated are HSBC and Credit Agricole, as well as JPMorgan, which accepted a fine for rigging in one market but not another.

UBS, RBS, Barclays, Rabobank and ICAP have been fined previously by other agencies for manipulating rates.