EC fines three banks over Euribor cartel

The European Commission (EC) imposed fines totalling €485m (US$520m) for their alleged participation in a cartel to manipulate the price of the Euro Interbank Offered Rate (Euribor) financial benchmark used in money markets.

The Commission said that Credit Agricole, HSBC and JPMorgan Chase were members of a seven-bank cartel that colluded between September 2005 and May 2008 to distort the Euribor interest rate, set using quotes submitted by a panel of banks. All three denied that they had engaged in any wrongdoing.

JPMorgan Chase was fined €337.2m and Credit Agricole €114.7m for their alleged five-month involvements in the cartel, while HSBC was fined €33.6m for a one-month participation.

The latest penalties follow a fine of €824.6m imposed on Deutsche Bank, Royal Bank of Scotland (RBS) and Société Générale in December 2013 after admitting their involvement in a cartel. It represented the sixth largest collective cartel fine ever handed down by the EC. The alleged seventh member, Barclays, avoided a penalty after alerting the Commission.

The EC investigation found evidence of chatroom messages between the traders at the banks congratulating each other on their actions.

On days when traders received money calculated on the basis of Euribor, (they) had an interest in a high Euribor rate,” said the European Union (EU) competition commissioner, Margrethe Vestager. “On days when a trader needed to pay … he would want to have a low Euribor rate.

The participation in such schemes was very lucrative for the banks … tiny, tiny movements in the Euribor rate can have a huge impact because of the volumes of trading.”

Credit Agricole said that it plans to appeal, but added that the fine would not affect its 2016 results as it had already taken provisions.

To date, US and European regulators have imposed fines on more than 10 banks and brokerages for rigging the London interbank offered rate (Libor), used for various currencies , and its euro cousin Euribor.

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