The European Commission announced today that it is fining seven banks and one broker for their involvement in cartels manipulating short term interest rate benchmarks in Euro (EURIBOR) and Japanese Yen (JPY LIBOR and TIBOR) to which trillions of USD of loans and derivatives are linked. The total fines issued amount to €1.7bn with Deutsche Bank facing the largest penalty of about €725m.
The EURIBOR cartel operated between September 2005 and May 2008. The cartel aimed at distorting the normal course of pricing components for the derivative products which were linked to EURIBOR. Traders of different banks discussed their bank’s submissions for the calculation of EURIBOR, as well as their trading and pricing strategies. Barclays, Deutsche Bank, RBS and Soc Gen all reached settlement with the Commission. Barclays also benefitted from immunity under the Commission’s leniency regime. The Commission’s investigation continues against Credit Agricole, HSBC and JP Morgan.
The JPY and LIBOR infringements took place between 2007 and 2010. The collusion included discussions between traders of the participating banks on certain JPY LIBOR submissions. The traders involved also exchanged, on occasions, commercially sensitive information relating either to trading positions or to future JPY LIBOR submissions (and in one of the infringements relating to certain future submissions for the Euroyen TIBOR – Tokyo interbank offered rate). The banks involved in one or more of the infringements are UBS, RBS, Deutsche Bank, Citigroup and JPMorgan. The broker RP Martin facilitated one of the infringements by using its contacts with a number of JPY LIBOR panel banks that did not participate in the infringement, with the aim of influencing their JPY LIBOR submissions. The five aforementioned banks and the broker all agreed to settle the case with the Commission. The investigation continues against the cash broker ICAP.
The Commission’s press release can be found at http://europa.eu/rapid/press-release_IP-13-1208_en.htm.
Kassie Smith QC is acting in Guardian Care Homes v Barclays, a misselling and competition law claim in the UK courts arising from the LIBOR scandal. She is also advising in a number of other potential damages actions.