EU fines top banks for rigging rates

JP Morgan, HSBC and Credit Agricole have been hit with over a billion in total fines over “collusion” in EU rate rigging, the EU commission has found.

The three banks were issued a fine over claims that they attempted to rig the Euro Interbank Offered Rate (Euribor). The Euribor is the standard borrowing rate for the Eurozone, similar to that of the UK Libor. The rate is used to determine a wide variety of financial contracts and various financial institutions have been under investigation since 2011 over rigging activities.

The EU commission ultimately concluded that the three major banks “colluded” on the pricing of euro interest rate derivatives and in turn “exchanged sensitive information”.

According to the statement released by the EU commission, this practice violates “Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement” which “prohibit cartels and other restrictive business practices.”

Morgan Stanley was awarded the most substantial fine, totaling €337 million. Credit Agricole have been issued with a slightly smaller €114 million, and €33 million for HSBC.

European competition commissioner Margarethe Vestager’s remarks stated that the size of the respective fines was decided according to how long each bank participated in the rigging practice, as well as the severity of their involvement.

Ms. Vestager added: “I hope it marks the end of our investigations.”

In response to the fine, Morgan Stanley issued a statement:

“We have cooperated fully with the European Commission throughout its five year investigation. We did not engage in any wrongdoing with respect to the Euribor benchmark. We will continue to vigorously defend our position against these allegations, including through possible appeals to the European courts.”

Similarly, in 2013 the EU comission issued a fine totalling €1.04bn (£890m) for Deutsche Bank, RBS and Societe Generale over similar rigging rate allegations.