Banks May Seek Quick End to EU’s Libor Probe, Almunia Says

Banks under investigation as part of the European Union probe into the manipulation of benchmark interest rates, including Libor, may favor a speedy decision from regulators, the EU’s top antitrust regulator said.

“I tend to think that the parties involved are also interested in a quick decision,” EU Competition Commissioner Joaquin Almunia told reporters in Berlin today.

The EU is pushing to fine banks before the end of the year for attempting to fix benchmark interest rates tied to the euro and yen currencies, two people familiar with the investigation said this month. Several banks want to resolve the antitrust probe and may negotiate for a settlement as early as October, said the people, who asked not to be named because the talks are private.

“If the parties are not putting obstacles and dragging their feet more than the normal attitude of those being investigated by the cartel authority, maybe the first decisions of the first investigation with Libor can take place at the end of this year, the start of next year,” Almunia said.

Barclays Plc, Deutsche Bank AG, UBS AG and Royal Bank of Scotland Group Plc are among banks and brokerages that have been quizzed by the EU about manipulation of lending rates that may have helped them and others generate profits from derivatives trades. Almunia, who previously described the fixing of the London interbank offered rate as “quite shocking” and has warned that any fines would “not be one euro,” is also probing the possible rigging of the Swiss franc Libor rate.

Price Fixing

The EU is treating the collusion as a price-fixing cartel that can be punished under its antitrust rules. That means fines can be as much as 10 percent of a company’s yearly global revenue and are based on its annual sales in the market where it tried to fix prices. Authorities rarely impose the maximum.

The U.K. Financial Conduct Authority, previously known as the Financial Services Authority, started looking into manipulation of Libor in 2009 after the CFTC requested its assistance the prior year. The British agency opened a formal investigation of that rate in early 2010, leading to Barclays, UBS and Royal Bank of Scotland Group being fined more than more than $2.5 billion over the past 12 months for rigging Libor, a global benchmark for $300 trillion of securities.

Global regulators last week called for nations to overhaul rules for interbank lending rates and other so-called market benchmarks as a matter of urgency as authorities seek to repair the damage wrought to market confidence by rate-fixing scandals.

Before it's here, it's on the Bloomberg Terminal.