EU charges four banks over alleged bond trading cartel

Deutsche Bank has paid more than US$3 billion to resolve investigations it manipulated benchmark interest rates including Libor which are used to price loans and contracts around the world.
Deutsche Bank has paid more than US$3 billion to resolve investigations it manipulated benchmark interest rates including Libor which are used to price loans and contracts around the world.PHOTO: REUTERS

Deutsche Bank, Credit Agricole, Credit Suisse and another bank accused of price manipulation

BRUSSELS • Deutsche Bank, Credit Agricole, Credit Suisse and another bank have been charged by European Union antitrust regulators for being in a bond trading cartel.

It was the latest blow to the reputation and public image of the banking sector in Europe, which has faced billions of euros in fines for rigging interest rate benchmarks.

The European Commission on Thursday did not name the banks it had charged. However, it said its investigation focused on the conduct of certain traders at four banks and contact between them, largely through online chatrooms.

Following its statement, Deutsche Bank and Credit Suisse said they were cooperating with the probe.

If found guilty of breaching EU antitrust rules, the banks could face fines up to 10 per cent of their global turnover, although Deutsche Bank said it had proactively cooperated with the investigation and did not expect a financial penalty.

Deutsche Bank, whose shares were down 5.6 per cent by 1455 GMT, has paid more than US$3 billion (S$4.1 billion) to resolve investigations that it manipulated benchmark interest rates, including Libor, which are used to price loans and contracts around the world.

Credit Suisse said it was cooperating with the EU antitrust enforcer and that the case related to trading by a single employee who had left the Swiss bank in early 2016. Its stock fell 3.5 per cent.

SENSITIVE INFORMATION

The four banks exchanged commercially sensitive information and coordinated on prices concerning US dollar-denominated supra-sovereign, sovereign and agency bonds, known as 'SSA bonds'.

EUROPEAN COMMISSION

Credit Agricole, which received a €114.6 million (S$179 million) EU fine in 2016 for being part of a Euribor cartel, confirmed it had received the EU charge sheet. Its shares were trading 3.4 per cent lower by 1500 GMT.

"The four banks exchanged commercially sensitive information and coordinated on prices concerning US dollar-denominated supra-sovereign, sovereign and agency bonds, known as 'SSA bonds'," the commission said.

Regulators worldwide have penalised the financial industry billions of euros in recent years for rigging financial benchmarks. In most cases, online chatrooms helped regulators to uncover the manipulation.

The latest case could expose the banks to investor litigation, said Mr Simon Hart, a partner at law firm RPC. "If there has been collusion... then this opens up the real possibility of claims by investors in those markets who were adversely affected," he added.

A version of this article appeared in the print edition of The Straits Times on December 22, 2018, with the headline 'EU charges four banks over alleged bond trading cartel'. Print Edition | Subscribe