JPMorgan hit hardest as EU fines rate-rigging trio US$521 million

The European Commission has fined Credit Agricole, HSBC and JPMorgan Chase a total of 485 million euros (US$520 million) for their part in a cartel to fix the price of financial benchmarks linked to the euro.
JPMorgan Chase was fined 337.2 million euros for rigging the Euribor benchmark as European Union antitrust regulators wrapped up a five-year investigation into the scandal.
JPMorgan Chase was fined 337.2 million euros for rigging the Euribor benchmark as European Union antitrust regulators wrapped up a five-year investigation into the scandal.PHOTO: AFP

LONDON (BLOOMBERG) - JPMorgan Chase, HSBC Holdings and Credit Agricole were fined a total of €485.5 million (S$739.4 million) for rigging the Euribor benchmark as European Union antitrust regulators wrapped up a five-year investigation into the scandal.

The trio colluded on euro interest rate derivative pricing elements, and exchanged sensitive information, in breach of EU antitrust rules, the European Commission said on Wednesday (Dec 7) in an e-mailed statement. JPMorgan was fined €337.2 million, HSBC got a €33.6 million penalty and Credit Agricole must pay €114.7 million.

"Banks have to respect EU competition rules just like any other company operating in the single market," said Ms Margrethe Vestager, the EU's antitrust commissioner.

The EU's investigation into Euribor manipulation was strained three years ago after Credit Agricole, JPMorgan and HSBC refused to join a multi-bank settlement with four other lenders including Deutsche Bank and Societe Generale. Since then, the holdouts have been a thorn in the commission's side - successfully delaying the process and showing up the regulator for its handling of the case.

The three lenders were handed a statement of objections in May 2014 accusing them of colluding to rig Euribor rates in the wake of a global scandal embroiling some of the world's biggest banks. By refusing to settle the case with the commission they forfeited the chance of a 10 per cent discount on any fines.

JPMorgan "did not engage in any wrongdoing with respect to the Euribor benchmark," Ms Jennifer Zuccarelli, a spokesman for the bank in London, said in the statement. "We will continue to vigorously defend our position against these allegations, including through possible appeals to the European courts." Credit Agricole in a statement said it "firmly believes that it did not infringe competition law" and that "it will appeal the commission's decision".

The fine payment "will not affect the 2016 financial statements given the provisions set aside previously", the Montrouge, France-based bank said.

HSBC said it "did not participate in an anti-competitive cartel", and is also considering its legal options, according to a statement.

In late 2013, EU antitrust regulators issued penalties initially worth a total of €1.7 billion as part of a multi-bank settlement related to manipulation of the Libor and Euribor benchmarks - a year and a half after Barclays was fined by UK and US authorities. The EU fines were reduced earlier this year by €218 million after the EU slashed Societe Generale's Euribor penalty due to a calculation "mistake".

The four banks that settled the Euribor case were accused of sharing, via phone and through online chats, sensitive trading information among themselves and strategising to push benchmark rates up or down to suit their trading positions.

About US$9 billion in fines have been levied against a dozen banks by global authorities over the manipulation of the London interbank offered rate and similar benchmarks in the last four years and more than 20 traders charged.

Libor and Euribor, the euro interbank offered rate, gauge banks' estimated cost of borrowing over different periods of time. The rates are a benchmark used to calculate interest payments for trillions of euros worth of financial products including mortgages.