The move adds another layer to the already significant penalties handed out to banks for manipulating benchmark rates that influence an array of loans and financial products.
The Swiss Competition Commission, which disclosed its investigation of the rigging of rates and related financial products in 2012, said on December 21 that it has issued a total of roughly 99 million Swiss francs ($ 96.3 million) in fines to banks including JP Morgan, Royal Bank of Scotland, Deutsche Bank, Citigroup, Barclays, Societe Generale and Credit Suisse.
The commission, known as Comco, said JP Morgan and RBS ran a “bilateral cartel” to influence the Swiss franc Libor benchmark rate, which is widely used by banks to determine on what terms they will lend to each other and to price derivatives, between 2008 and 2009. RBS received immunity for revealing the cartel and wasn’t fined, Comco said, while JP Morgan received a fine of Sfr33.9 million.
RBS, Citi, Deutsche Bank, and JP Morgan were fined a total of Sfr14.4 million for colluding to influence the Yen Libor rate and related yen derivatives between 2007 and 2010, Comco said. The commission said it is continuing a related investigation of banks including UBS and HSBC.
Another group of banks were fined Sfr45.3 million for manipulating the Euro Interbank Offered Rate, or Euribor. Deutsche Bank, Barclays, RBS, and Societe Generale participated in a related cartel between 2005 and 2008, Comco said, adding that Deutsche Bank received full immunity for revealing the arrangement to the commission, and wasn’t fined.
Credit Suisse, JP Morgan, RBS and UBS operated a cartel to manipulate the pricing of Swiss franc interest rate derivatives in 2007, Comco said. UBS received immunity for revealing the cartel and was not fined. The derivatives are contracts used to manage risk tied to interest rate movements.
A Credit Suisse spokesman said the bank is “pleased to have resolved this matter.” An RBS spokeswoman said the bank is pleased to have settled the matter and is “determined to put these issues behind us.” A Barclays spokesman said the bank is also pleased to have reached a settlement, and noted that it relates to activity that took place “almost a decade ago”.
JP Morgan said it was happy to settle the matter and that “the Commission has made no finding that our rate submissions were ever compromised”.
A spokeswoman for Deutsche Bank declined to comment. Representatives from Citi, and Societe Generale did not immediately respond to requests for comment.
A UBS spokeswoman said the bank will “strongly defend” itself in the ongoing, yen-related probe. An HSBC spokeswoman declined to comment.
Global banks have already been hit with billions of dollars in fines as a result of probes in multiple countries into interest rate rigging. Tom Hayes, a former UBS and Citi trader, was convicted in the UK last year for overseeing a scheme to rig Libor, or the London interbank offered rate – a key benchmark. Several other former brokers were acquitted of related criminal charges.
Comco said on December 21 that all of the banks that have been fined as a result of its rate-rigging probe have reached related settlements. The banks can seek to appeal the commission’s decisions in federal court.
Write to John Letzing at email@example.com
This article was published by The Wall Street Journal