EU antitrust regulators will impose record multi-million euro fines on six banks including Citigroup, Deutsche Bank and Royal Bank of Scotland on Wednesday (4 December) for rigging key interest rate benchmarks, sources said.
The sanctions, the first by the European Commission for rate manipulation and expected to top 1.5 billion euros ($2.04 billion), follow hefty fines on top banks for similar offences from authorities in the United States, Britain and elsewhere.
The benchmarks involved in the three cases – the London interbank offered rate Libor, the Tokyo and the euro area equivalents – are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.
JPMorgan and Barclays were also in the group charged with manipulating Libor and the Tokyo interbank offered rate Tibor, a person familiar with the matter said.
The banks admitted liability in return for a 10% reduction in fines. UBS alerted the European Commission to the yen interest rate derivatives wrongdoing and will not be penalised.
Deutsche Bank and Royal Bank of Scotland will also be penalised for rigging benchmark euro zone interest rates. French bank Societé Générale is also part of the group facing sanctions for alleged rigging of the rate known as Euribor.
HSBC and Crédit Agricole are likely to be penalised next year after refusing to settle the case with the Commission. Barclays blew the whistle on the group and will not be fined.
It was not immediately clear if JPMorgan will be sanctioned for its Euribor involvement on Wednesday or next year.
EU Competition Commissioner Joaquin Almunia is expected to announce the fines for the three cases at 1030 GMT on Wednesday, a second person said.
Barclays, Deutsche Bank, Société Générale, RBS, JPMorgan and Citigroup declined to comment. HSBC and Crédit Agricole were not immediately available to comment.
Commission spokesman for competition policy Antoine Colombani could not be immediately reached for comment.
Authorities around the world have so far fined UBS, RBS, Barclays, Rabobank and broker ICAP $3.7 billion for manipulating rates. Seven individuals face criminal charges.
UBS paid a record fine of $1.5 billion (€1.1bn) late last year to the US Department of Justice and the UK's Financial Services Authority for rate-rigging.
EU fines can reach up to 10% of a company's global turnover. RBS had a turnover of 25 billion pounds (€30.1bn) last year, while Barclays was 29 billion pounds (€34.9bn). Société Générale's was €23.1bn, Deutsche Bank's €33.5bn and JP Morgan's revenue was $97 billion (€21.3bn).
The current record for an EU cartel fine is €1.47 billion for a cartel involved with cathode-ray tubes.
The European Commission proposed new rules in September 2013 that aim to avoid repeats of the scandals affecting the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) in 2012.
The proposals would regulate a huge range of indexes covering finance, commodities, energy and currencies for the first time. They would also indirectly affect consumer banking products such as home loans and credit cards.
If agreed, the legislation will affect how all benchmarks are set, including North Sea Brent crude, which helps to determine gasoline prices.
But it stops short of handing direct regulatory authority over benchmarks to the European Securities and Markets Authority (ESMA), a move resisted by the City of London.
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