The European commission has said it is imposing fines on eight financial institutions – including the British-based Royal Bank of Scotland (RBS) – over accusations that they rigged interest rates.
It was claimed on Wednesday that the group of banks had been colluding on the issue, which the EU described as “shocking”.
The eight banks, also including Deutsche Bank, UBS and JP Morgan, were fined a total of €1.7 billion (£1.4 billion). Barclays and UBS were both made exempt from paying anything at all because they fully co-operated throughout the investigations. Both had been set to pay the highest fines, at €2.5 billion (£2.1 billion) and €690m (£5.72m) respectively.
Joaquín Almunia, commission vice-president in charge of competition policy, said, “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.”
He added, “[Wednesday’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.”
Banks that are currently being investigated but have not yet been fined include RBS, Credit Agricole and JP Morgan. JP Morgan has been fined for rigging in one market, but has denied rigging in another.
Speaking about the penalties, Prof Andre Spicer of City University London said, “The large fines levied on many banks today are not the only cost they will have to bear. [The] fines will continue to undermine the reputation of the big banks.”
He added, “It will mean customers will be even more wary of them, regulators will continue to be over-bearing. Investors will be concerned about what other costly scandals are yet to come out.”
The fresh fines by the European commission build on previous penalties for British banks RBS and Barclays, which have already received fines for similar practices on the London interest rate market.