Seven Banks Fined in Swiss Probes of Rate-Rigging Cartels

  • JPMorgan to pay $33 million for franc Libor cartel with RBS
  • Barclays to pay $29 million for collusion Euribor rate cartel

Switzerland handed out about $100 million in antitrust fines against seven U.S. and European banks for participating in cartels to manipulate widely used financial benchmarks.

JPMorgan Chase & Co. was fined 33.9 million francs ($33 million) for operating a cartel with Royal Bank of Scotland Group Plc for more than a year, with the aim of influencing the Swiss franc Libor benchmark, which is tied to the London interbank offered rate, Switzerland’s competition commission said in a statement Wednesday. RBS received immunity for revealing the existence of the cartel, which operated between March 2008 and July 2009.

“RBS and JPMorgan tried to distort the normal course of the pricing of interest-rate derivatives denominated in Swiss franc,” the commission wrote. “They occasionally discussed the future Swiss franc Libor rate submissions of one of the banks and at times exchanged information concerning trading positions and intended prices.”

Regulators across the globe have been probing banks’ manipulation of Libor and similar benchmarks that are used to calculate interest payments for trillions of euros of financial products including mortgages. The investigations have so far triggered about $9 billion in fines for a dozen banks in the last four years while more than 20 traders have been charged.

Libor and Euribor, the euro interbank offered rate, gauge banks’ estimated cost of borrowing over different periods of time. Earlier this month, JPMorgan, HSBC Holdings Plc and Credit Agricole SA were fined a total of 485.5 million euros ($505 million) for rigging Euribor as European Union antitrust regulators wrapped up a five-year investigation into the scandal.

‘Legacy Issue’

“We are pleased to settle this matter related to conduct from 2007-09,” Jennifer Zuccarelli, a spokeswoman for the JPMorgan in London, said by e-mail. “The commission has made no finding that our rate submissions were ever compromised.”

The Swiss commission fined three banks a total of 45.3 million francs for participating in a cartel involving the Euribor interest rate between September 2005 and March 2008. Barclays Plc was fined 29.8 million francs while RBS and Societe Generale SA will pay 12.3 million francs and 3.25 million francs respectively.

Deutsche Bank AG received immunity in the Euribor probe for alerting the commission to the cartel. BNP Paribas SA, Credit Agricole SA, HSBC Holdings, JPMorgan and Rabobank Groep remain under investigation in that probe.

“We are pleased to have settled this legacy issue,” RBS spokeswoman Linda Harper said. “The culture at RBS has changed dramatically in recent years. We are determined to put these issues behind us and build a bank that is fully focused on the best interests of our customers.”

Franc Rates

A spokesman for Societe Generale said “the matters essentially involved a single employee, who left the bank in September 2009, and neither the Swiss COMCO nor the European Commission found that this employee’s management was aware of his actions.”

“Societe Generale strongly condemns this type of individual behavior and has entirely reviewed its interbank rate submission process to comply in full with the new standards set by the various bodies and authorities concerned,” the spokesman said.

An official for Deutsche Bank declined to comment. JPMorgan didn’t immediately respond to requests for comment.

The Swiss commission announced 5.4 million francs in fines against three banks for conspiring to rig the bid-ask spread on Swiss franc interest-rate derivatives between May and September 2007. Credit Suisse Group AG must pay 2.04 million francs while JPMorgan was fined 2.6 million francs and RBS 856,000 francs. UBS Group AG received immunity.

A spokesman for Credit Suisse said the bank was “pleased to have resolved this matter.”

Citigroup Inc., Deutsche Bank, JPMorgan and RBS were fined 14.4 million francs for collusion in the trading of yen interest rate derivatives that violated antitrust law between 2007 and 2010. The commission dropped its investigation of three Japanese banks, while HSBC, Lloyds, Rabobank and UBS remain under investigation, as well as three interdealer brokers.

UBS will “strongly defend its position" in the proceedings, the bank said in an e-mailed statement.

(An earlier version of this story corrected the name of HSBC Holdings.)

— With assistance by Jan-Henrik Foerster

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