RBS share price: Lender to pay £325m fine in rate-rigging settlement

on Dec 4, 2013
Updated: Oct 21, 2019
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iNVEZZ.com, Wednesday, December 4: The Royal Bank of Scotland (LON:RBS) has agreed to pay a fine of €391 million (£324.8 million) for participating in illegal cartels that manipulated key benchmark interest rates to profit from related derivatives, while Barclays (LON:BARC) skipped a fine for blowing the whistle on the group. RBS is one of the six financial institutions that were hit by a record-high €1.71 billion fine under a settlement agreement with the European Commission. A total of eight banks admitted that their traders had participated in rate-fixing, with four major European banks taking part in a cartel relating to manipulating the European interbank offered rate (Euribor) and six banks involved in rigging its Japanese equivalent, the Yen London interbank offered rate (Yen Libor). However, two banks received full immunity for revealing the existence of the cartels – Barclays avoided a €690 million fine for its participation in the Euribor infringement and Swiss UBS (NYSE:UBS) skipped a €2.5 billion fine for its involvement in the Yen Libor cartel.

Among the banks penalised, Deutsche Bank (ETR:DBK) will pay the highest fine of €705 million for taking part in both cartels, Societe Generale (EPA:GLE) will pay €446 million for trying to rig the Euribor benchmark, JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) will pay €79.8 million and €70 million, respectively for manipulating the Yen Libor and broker RP Martin will pay €247,000 for facilitating the Yen Libor cartel.

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Three banks, JPMorgan, HSBC (LON:HSBA) and Credit Agricole (EPA:ACA) rejected settlements for the Euribor abuses and broker ICAP declined a settlement for the Yen Libor deal. They are likely to be penalised at a later point, as the Commission opened proceedings against them and the investigation will continue under the standard (non-settlement) cartel procedure. Even without those potential fines, the rate-fixing penalty is higher than the previous EU record of €1.47 billion for a cartel involved with cathode-ray tubes.

Joaquin Almunia, Commission Vice-President in charge of competition policy, commented: “What is shocking about the LIBOR and EURIBOR scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other. Today’s decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few.”

Before today, authorities around the world had already imposed a total of $3.7 billion in fines on UBS, RBS, Barclays, Rabobank and ICAP for manipulating rates. That sum is expected to continue rising as regulators conclude probes and private lawsuits add up. A number of banks, including Barclays, RBS, UBS, and Deutsche Bank are being investigated for manipulating the $4-trillion-a-day global foreign exchange market.

In today’s trading, RBS share price rose 0.13 percent to 331.42, while Barclays share price fell 2.24 percent to 260.25p by 13:55 UTC.
**As of 13:42 UTC buy RBS shares at 331.60p.**
**As of 13:42 UTC sell RBS shares at 331.40p.**
**As of 13:42 UTC buy Barclays shares at 260.30p.**
**As of 13:42 UTC sell Barclays shares at 260.20p.**
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