Banks slapped with $2.3 billion fine for rate manipulation

Wednesday, 4 Dec 2013 | 4:24 AM ET
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Some of the world's biggest banks have been hit with a 1.71 billion euros ($2.3 billion) fine for interest rate-rigging by traders, the largest fine ever imposed by the European Commission (EC).

Joaquín Almunia, vice-president of the EC and the Commissioner responsible for competition, said in a statement: "What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other.

"Today's decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few," he added.

The offences involved traders conspiring to fix the European interbank offered rate (Euribor) and its Japanese equivalent, the Yen London interbank offered rate (Yen Libor), for profit.

(Read more: Another week, another banking scandal)

The banks to be fined are Citigroup, Deutsche Bank, Royal Bank of Scotland, JPMorgan, and Societe Generale. Deutsche has to pay out the biggest fine for conspiring to rig both rates, with a 725 million euros bill. RBS was also fined over the setting of both kinds of rates, and must pay a total of 391 million euros.

At the other end of the scale, U.K. broker RP Martin was fined 247,000 euros for one infringement relating to Yen Libor.

Investigations into Crédit Agricole, HSBC, JPMorgan and broker Icap are ongoing.

"The settlement makes no finding that JPMorgan Chase management had any knowledge or involvement in the conduct at issue, or that the traders' actions had any impact on the firm's Libor submissions or the published Libor rates," a JP Morgan spokeswoman said in a statement.

The bank "intends to defend itself fully" against additional allegations its traders rigged Euribor - but has admitted that its employees rigged Yen Libor.

UBS has previously admitted taking part in the rigging of Yen Libor, but has avoided a 2.5 billion fine by blowing the whistle on other banks. It took part in five violations of regulations uncovered by the EC, while other banks involved took part in 1-3 infringements.

(Read more: Why traders are like baboons)

Barclays, which also avoided a 690 million euros fine from the EC over its role in Euribor manipulation, was the first bank to announce a fine over the London equivalent, Libor, last year, which kicked off a slew of revelations about the fixing of the rate, which affects things like the rates paid on mortgages and savings. The interest-rate rigging is one of many reputational issues facing global banks at the moment.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.

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