HSBC said to reject EU settlement in Euribor-rigging probe

HSBC Holdings Plc dropped out of talks to settle a European Union antitrust probe into rigging of Euribor lending rates according to a person familiar with the investigation, as regulators prepare to hand out fines to settling banks as soon as next month.

HSBC, Europe’s biggest lender by value, pulled out of the negotiations, according to the person, who asked not to be identified because the discussions are confidential. The discussions stumbled over the possible size of a fine and liability issues, according to a second person, who also asked not be named. Six other banks also entered into settlement talks with the European Commission, and at least one of those may have also pulled out of the discussions, the person said.

Regulators around the world are investigating whether more than a dozen firms, including Deutsche Bank AG, colluded to rig various benchmark interest rates to mask their true cost of borrowing. By refusing to settle with the commission in the Euribor probe, banks are giving up the chance of a 10% discount in fines in return for admitting that they colluded to manipulate benchmarks.

“The commission may be trying to overstretch its allegations and drive people into admitting to things that they simply did not fully participate in,” Rony Gerrits, a lawyer at Morrison & Foerster LLP in Brussels, said. A non-settling party may think it has “a better chance of limiting exposure” in front of the courts, said Gerrits, who isn’t involved in the cases.

December Fines

Banks settling with the EU will agree to admit to collusion over the manipulation of Euribor and may face fines as early as December, one of the people said. In exchange, they will get a 10% reduction on their fine. HSBC, and others that reject a settlement, would be separately sent a formal statement of objections.

Joaquin Almunia, the EU’s antitrust chief, has described rate-fixing as “quite shocking.”

Antoine Colombani, a spokesman for the European Commission in Brussels, declined to comment on the case. Brendan McNamara, a spokesman for HSBC in London declined to comment.

To gather information, commission officials raided banks, including Deutsche Bank and Royal Bank of Scotland Group Plc, that offer financial derivatives linked to Euribor in 2011, saying they were investigating possible collusion. The EU sent questionnaires to Barclays and HSBC earlier that same year.

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