Rate-rigging: RBS among banks hit with record £1.4bn EU fines

European Commission fines banks that formed illegal cartels to rig benchmark interest rates

LAST UPDATED AT 13:55 ON Wed 4 Dec 2013

THE Royal Bank of Scotland is among several banks and a broker fined a total £1.4bn by the European Commission for forming illegal cartels to rig benchmark interest rates.

The overall penalty is said to be the biggest yet handed down to banks by the Commission for the rigging of benchmark rates, which are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.

The settlements are the first after a two-year investigation into separate conspiracies to fix the Japan-focused Yen Libor and its European sister benchmark Euribor.

RBS was fined £325m, on top of the £390m it paid to UK and US regulators earlier this year. Deutsche Bank will pay the largest individual penalty of £602m, while Societe Generale, JPMorgan, Citigroup and the broker RP Martin were also fined. Barclays and UBS were spared penalties after being the first to alert authorities to the violations, reports the Financial Times.

Joaquin Almunia, the Commission's vice-president, said: "What is shocking about the Libor and Euribor scandals is not only the manipulation of the benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between the banks which are supposed to be competing with each other."

Almunia described the illegal cartels as "appalling examples of the misconduct" in the financial sector and said: "If you take the opportunity to see the conversation between these cartel traders you will be appalled." He added that today's fines sent a "clear message that the Commission is determined to fight and sanction these cartels in the financial sector".

Three banks - HSBC, Credit Agricole and JPMorgan - and broker Icap rejected the commission's offer to settle early. All face formal anti-trust charges which could lead to larger fines.

The FT says today's EU settlements bring the financial sector’s total penalties for benchmark manipulation to more than £3.5bn, a sum that is expected to continue rising as regulators conclude probes and private lawsuits stack up. · 

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