Commission charges HSBC, JPMorgan, Credit Agricole with rate-rigging

HSBC is Europe's largest bank. [Alex Vickery/Flickr]

European Union antitrust regulators charged Europe’s biggest bank HSBC, US peer JPMorgan and France’s Credit Agricole on Tuesday (20 May) with rigging financial benchmarks linked to the euro, exposing them to potential fines.

The European Commission also said it would charge broker ICAP soon for suspected manipulation of the yen Libor financial benchmark.

US and European regulators have so far handed down some $6 billion (€4.4 billion) in fines to 10 banks and brokerages for rigging the London interbank offered rate (Libor) and its euro cousin Euribor while prosecutors have also charged 16 men with fraud-related offences.

“The Commission has concerns that the three banks may have taken part in a collusive scheme which aimed at distorting the normal course of pricing components for euro interest rate derivatives,” the EU competition authority said.

The three banks and ICAP, which refused to settle the case in December, could face penalties of up to 10% of their global turnover if found guilty of breaching EU antitrust rules.

JPMorgan said the EU charges were without merit and that it would defend itself, while Credit Agricole said it would examine the charge sheet. HSBC said it would defend itself vigorously. ICAP could not immediately be reached for comment.

In December, a record €1.7 billion euro fine was levied on six banks including Deutsche Bank, Royal Bank of Scotland and Citigroup for similar offences. The lenders settled their charges and received a 10% cut in their fines (here).

“In the coming days or weeks, we will probably issue a new statement of objections against the broker (ICAP),” European Competition Commissioner Joaquín Almunia told a news conference.

He also said regulators have yet to decide on the next step of an ongoing investigation into suspected rigging and collusion in the trillion-dollar foreign exchange market, the world’s biggest marketplace.

“We received lots of information and we are looking into this information…We are not yet at this moment when I can announce steps of this case,” he said.

Almunia can choose to open a formal investigation into the case or keep things under wraps if enough banks decide to settle any charges and only announce a decision at the end.

More than 30 foreign exchange traders at many of the world’s biggest banks have been put on leave, suspended or fired as the forex probes in the various countries expand.

The probe focuses on activity related to the key foreign exchange benchmark, known as the WM/Reuters fix, which is tied to several exchange rates including the euro, sterling, Swiss franc and yen set daily in London.

These are compiled using data from Thomson Reuters and other providers, and are calculated by WM Company, a unit of State Street Corp, and are important because they are used as reference rates for trillions of dollars worth of investments, trade and corporate deals around the world.

EU antitrust regulators fined six financial institutions including Deutsche Bank, Royal Bank of Scotland and Citigroup a record total of €1.71 billion in December 2013 for rigging financial benchmarks such as the Libor and Euribor rate. Unlike the six, Credit Agricole, HSBC, JPMorgan and brokerage ICAP refused to settle and were charged with rate-rigging. 

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