Regulators say Euribor reforms ‘must continue’ following rigging scandal

Euribor-EBF, which overseas the setting of European interest rate benchmarks, “must continue” to reform after several lenders were fined for rigging it, regulators have said.

In December, the European commission announced it was imposing fines on eight financial institutions, including British-based Royal Bank of Scotland, over accusations they rigged interest rates. The Euribor scandal, along with similar actions in the Libor benchmark, have been described as “shocking” by Joaquin Almunia, vice-president of the commission in charge of competition policy.

Banks are accused of manipulating interest rates in order to profit from trades and to give the appearance they were more creditworthy than they actually were.

The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) noted that Euribor had made “significant progress” in implementing the recommendations aimed at addressing weaknesses and shortcomings in its governance and technical framework. So far four of the recommendations have been implemented fully and an additional six have been incorporated partially.

The regulators said the progress provides a basis for “improved transparency of the benchmark-setting process, enhanced governance of the benchmark, and improve quality of the resulting index.”

Steps Euribor have taken include two new conflict of interest policies being adopted, a commitment to perform both internal and external audits regularly and disclose results, and setting minimum requirements for the submission process and control mechanisms.

Andrea Enria, chair of the EBA, commented, “Euribor-EBF is on the right path. Its progress in term of governance and conduct reflects a strong commitment to ensuring the quality if its benchmarks. I remain confident that the Euribor-EBF will soon complete its work, building on the continued support and commitment of panel banks.”

Further reading:

RBS among eight major banks fined by EU over rate-rigging

Three former Barclays employees charged over Libor rigging

‘Unethical behaviour’ at UBS warrants £940m Libor fine

RBS dealt £390m fine over rigging Libor rate

22 more people implicated in Libor scandal