EU seeks multibillion-euro fines for rigging rates

Brussels is poised to levy multibillion-euro fines on banks that took part in a cartel to rig two key global interest rate benchmarks as the cost of financial misconduct continues to spiral.

Royal Bank of Scotland, Deutsche Bank and Société Générale are to pay the fines next month to settle allegations they acted in concert to manipulate either Euribor, Yen Libor or both benchmarks, according to people familiar with the talks.

A further three banks – JP Morgan, HSBC and Crédit Agricole – have been involved in the talks but are holding out from signing a joint Euribor settlement, the people said. These banks are likely to face formal charges that may lead to fines.

The news comes at a torrid time for the world’s biggest banks, which are facing a litany of scandals ranging from allegations they manipulated the foreign exchange market to the mis-selling of mortgage securities and consumer products.

Next month’s bumper EU settlement relates to alleged collusion between interest rate traders in two separate cartels, which sought to gain by manipulating the benchmarks.

Up to €800m each
The commission has warned some banks it is seeking a fine of as much as €800 million each for groups involved in both cartels. The precise level will depend on a mix of culpability and market share.

Even with three banks holding-out, the settlement is expected to smash antitrust records in Europe. Four banks – Barclays, RBS, UBS, Rabobank – and broker ICAP have settled with regulators around the world over wider Libor abuses, paying a combined $3.5 billion in fines. – (Copyright The Financial Times Limited 2013)