Turkish Banks May Face $828 Million Fine for Rate-Rigging

Turkish banks may be fined about 1.5 billion liras ($828 million) should the antitrust regulator rule they formed a cartel to fix interest rates, according to two Turkish officials close to the investigation.

Banks including Yapi & Kredi Bankasi AS, part-owned by UniCredit SpA, Turkiye Garanti Bankasi AS, the country’s biggest by market value, and Akbank TAS are telling the Competition Board in Ankara that any fine, set at a maximum of 10 percent of total annual revenue, should be reduced because any cooperation on rates was informal, the officials said today, asking not to be identified because the discussions aren’t public.

Twelve banks in Turkey are under investigation for allegedly colluding to set rates on loans, deposits, credit card fees and commissions from 2007 to 2011. The probe comes after Barclays Plc, UBS AG and Royal Bank of Scotland Plc were fined $2.5 billion for fixing the London interbank offered rate and other global benchmarks. Prime Minister Recep Tayyip Erdogan has accused banks of charging consumers and businesses too much interest on loans.

The regulator, which is autonomous, heard banks’ verbal defense over the past two days. It may bring forward the ruling from March 12 to help ease concern among investors, one of the officials said.

Regulatory Presssure

Yapi Kredi has never been part of a cartel to set rates or proposed any agreement to do so, it said in an e-mailed statement today. Akbank follows rules on competition and is not involved in cartels, Chief Executive Officer Hakan Binbasgil told this week’s hearings. Akbank’s press office declined to comment further. Garanti’s press office referred to a statement made by Deputy CEO Aydin Duren at the hearings, where he complained about regulatory pressure on banks. It declined to comment further.

The main banking index in Istanbul rose 0.7 percent to 159,544.9 at the close of trade, paring losses this year to 1.8 percent. The emerging market MSCI EM Banks Index climbed 2.2 percent since Jan. 1 and Turkey’s benchmark ISE National-100 index was unchanged.

The amount of the fine will depend on whether the collaboration between the banks can be classified as a cartel, one of the officials said.

Akbank TAS, Yapi & Kredi Bankasi AS and Garanti are three of the banks accused of forming a group to fix rates, Sabah newspaper reported earlier today, without saying where it got the information. While Yapi Kredi admitted to proposing a “gentlemen’s agreement,” it said the suggestion was never implemented, Sabah said.

The report in Sabah is not accurate or truthful, Yapi Kredi said in the e-mailed statement.

Other banks named by the regulator in the probe are Denizbank AS, Finansbank AS, the Turkish units of HSBC Holdings Plc and ING Groep NV, Turk Ekonomi Bankasi AS, Turkiye Halk Bankasi AS, Turkiye Is Bankasi AS, Turkiye Vakiflar Bankasi TAO and TC Ziraat Bankasi AS.