EU nears bank fines over rate rigging claims

 
Michael Bow
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A HOST of global banks are nearing a multi-billion euro settlement with EU competition regulators over allegations of European interest rate rigging.

The European Commission is probing claims a cartel of traders acted together to fix the Euribor interest rate, which feeds into a host of prices used to sell financial products.

The commission has been investigating banks including Royal Bank of Scotland, Deutsche Bank Societe Generale, JP Morgan, HSBC and Credit Agricole in conjunction with the probe for the past two years.

The Euribor rigging case is closely related to the Libor fixing case, which rocked financial institutions around the world last year, and is set to increase pressure on an industry already reeling from a range of regulatory fines.

Under the terms of the EU settlement, which looks set to be announced next month, the six banks could be fined up to €800m each, though some of the banks which settle early with the commission are likely to receive a ten per cent discount. The commission has the power to fine banks up to ten per cent of revenues. Joaquin Almunia, the European commissioner responsible for competition, indicated last month that the investigation was nearing its conclusion, saying its “cartel investigations are very well advanced, and there will be news soon”.

However, reports surfaced last night suggesting three of the banks were holding out from a joint settlement with regulators, which could delay any fines by the commission.

A European commission spokesman declined to comment. Euribor – or the Europe interbank offered rate – is set on a daily basis using estimates submitted by a panel of 44 banks.