EU fines three major banks over interest rate rigging

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The EU’s top anti-trust regulator on Wednesday slapped fines on banks HSBC, JP Morgan and Credit Agricole for rigging the Euribor interest rate benchmark used for a wide range of financial instruments.

The European Commission, the EU’s executive arm, fined the banks “a total of 485 million euros for participating in a cartel in euro interest rate derivatives,” according to a statement.

The decision is the latest example of authorities trying to punish malpractice by the world’s biggest banks in the years running up to the financial crisis in 2008.

The three banks had held out from a settlement with the EU in 2013 that saw Deutsche Bank, Societe Generale and Royal Bank of Scotland accept responsibility in the case.

”Today’s message sends a clear message: banks and all companies have to respect EU rules,” said the EU’s competition chief Margarethe Vestager at a news briefing.

The Euribor case is one of many involving the complicated business of setting benchmark rates, such as the Libor or the Yen Libor, that are used everyday to set the price of a wide range of assets including mortgages and student loans.

In recent years, about a dozen of the world’s biggest banks have admitted widespread collusion to manipulate the rates illegally and were slapped with billions in fines and even prison terms.

Vestager said traders in the Euribor case used online chat rooms to offer rivals special favours in order to help rig the rate at a more desired level.

”They exchanged sensitive and confidential information about their trades and their strategy for trading,” Vestager said, adding that the bankers often spoke in vulgar language.

Credit Agricole and HSBC had never before been caught up in a post-crisis rate rigging scandal, while JPMorgan previously joined EU settlements over Libor rate-rigging.

The highest fine on Wednesday went to US giant JPMorgan Chase with a sanction of 337 million euros.

Credit Agricole, which said it would appeal the decision, was fined 115 million euros , while HSBC was hit with a fine of 33.6 million euros.

In a similar case in the UK, four former Barclays bankers were jailed by a court in July for manipulating the Libor interest rate between 2005 and 2007.

In the US, two bankers found guilty of rigging Libor both received jail terms of two years or less.

Some of the traders convicted have come out sharply against authorities for only pursuing the junior workers involved in the cases when they said more senior management was implicated.