AMSTERDAM - The European Commission has fined a group of major global banks a total of 1.7 billion euros ($2.3 billion) for colluding to profit from the interest rates market.
The banks, which include JP Morgan,
Citigroup and HSBC, are accused of manipulating for years European and Japanese
benchmark interest rates that affect hundreds of billions of dollars in contracts
globally, from mortgages to credit card bills.
The Commission, the EU's executive
arm, is only the latest to punish banks for profiting from manipulating
interest rates, after similar cases brought by U.S. and national European
"We want to send a clear message
that we are determined to find and punish these cartels," competition
commissioner Joaquin Almunia said Wednesday.
The banks named as participating in
cartels were Barclays, Deutsche Bank, Royal Bank of Scotland, Societe Generale,
Credit Agricole, HSBC, JPMorgan, UBS and Citigroup.
In a first cartel, which operated from
2005 to 2008 and was focused on euro-denominated derivatives, Deutsche Bank
received the largest fine, of 468 million euros, followed by Societe Generale
with 445 million euros. RBS was fined 131 million euros.
Barclays escaped fines because it was
the bank that notified the Commission of the cartel's existence, while
JPMorgan, HSBC and Credit Agricole have as yet not settled. JPMorgan and HSBC
denied wrongdoing Wednesday, though JPMorgan settled with the Commission in a
second cartel case.
"This is not the end of the
story," Almunia said. He noted that further investigations are possible
and the Commission is also probing a cartel it believes manipulated derivatives
denominated in Swiss francs.
In a response to the fine, Deutsche
Bank Chief Executive Juergen Fitschen referred to the euro cartel as a
"legacy issue" caused by "past practices of individuals" at
the bank. Fitschen has worked there since 1987 and became CEO in 2012.
He acknowledged participating in the
cartel had been a "gross violation" of the bank's ethics. But he said
the fine wouldn't hurt the bank's profits as it has already made provisions for
the fines it deemed likely from regulators.
A second cartel fined by the
Commission Wednesday operated from 2007 to 2010 and focused on yen-based
derivatives. The largest fines went to RBS and Deutsche Bank, 260 million euros
each, while UBS received immunity for revealing the existence of the cartels.