By Mack Wilowski, International Business Writer
As of December 7, three big banks, namely HSBC, JPMorgan & Chase, as well as Credit Agricole, were fined by antitrust regulators for the practice of manipulating financial benchmarks linked to the Euro. Initial accusations were levied against the three banking institutions in May of 2014, after which all three banks denied fraudulence and wrongdoing. Since then, charges were delayed but have resurfaced in the past months, leading to a final verdict by the European Commission to impose multimillion dollar fines upon the three companies.
European Commission antitrust officials are considering the scope of potential fines and penalties imposed for the alleged manipulation of the Euro Interbank Offered Rate. Upon its implementation, the final verdict marks the end of a five-year probe by European antitrust officials in considering monetary fines against the three banks.
Penalties against other financial institutions were imposed by the European Union in December of 2013. Four European-based banks, including Societe Generale, Deutsche Bank AG, Barclays PLC, and the Royal Bank of Scotland together received an aggregate penalty of 825 million Euros, or roughly $880 million. The allegations were similar to those described in the present case. Under European regulations, the EU competition enforcer can levy fines of up to ten percent of a company’s global turnover profit for breaching the antitrust rules imposed by the bloc.
Unlike in the present situation, however, Deutsche Bank, RBS, and Societe Generale admitted guilt in the 2013 case, while Barclays managed to avoid a fine after the commission was altered. Currently, JPMorgan & Chase and HSBC admit to no wrongdoing given the present circumstances. Declining to comment on Wednesday, officials at JP Morgan have reiterated a previous statement concerning the allegations: “JPMorgan Chase has co-operated fully with the European Commission throughout its investigation and does not believe that the firm engaged in wrongdoing with respect to the Euribor benchmark. The company intends to defend itself fully.”
Since the financial crisis, U.S. and European regulators have enforced more stringent laws on financial malpractice involving major banks and lenders. Administrators and regulators in both Europe and North America have handed down billion-dollar fines to more than ten banks and brokers for allegedly rigging the London Interbank Offered Rate, a globally recognized benchmark rate used by banks in charging short-term loans to other financial institutions. The benchmark is also used by ordinary investors in calculating interest rates. Similar penalties have been imposed for manipulating the Euribor rate, a similar benchmark used by European institutions. Having rejected to settle the matter at an earlier date, JPMorgan and HSBC have missed out on an opportunity to receive a ten percent discount on the fine set by EU regulators.
As a result of the probe, which was years in the making, the European Comission, headquartered in Brussels, decided to charge multimillion dollar fines against JPMorgan, HSBC, and Credit Agricole on Wednesday, December 7th. Margrethe Vestager, head of the European Commission for Business Competition, uncovered fines ranging from ten to over one-hundred million Euros, as was reported by people familiar to the case. The banks involved have fought hard against the charges and some are likely to appeal.
The EU decisions will be the first ruling against HSBC and Credit Agricole for taking part in the global rate-rigging scandal. Having joined European Union settlements over Libor rate manipulation. The total fee amount received by each of the three banks will likely exceed 140 million Euros once all rulings have been put into place.
A version of this article appeared in the Tuesday, December 10th print edition.
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