Deutsche Bank AG and Royal Bank of Scotland Group Plc are among six companies fined a record 1.7 billion euros ($2.3 billion) by the European Union for rigging interest rates linked to Libor.
Deutsche Bank was fined 725 million euros, the biggest single penalty. Societe Generale SA was fined 446 million euros and RBS must pay 391 million euros, the EU said in a statement in Brussels. The combined fines for manipulating the yen London interbank offered rate and Euribor are the largest-ever EU cartel penalties.
While global fines for rate-rigging reached $6 billion today, the cost to banks may climb as they face more investigations and lawsuits worldwide. EU Competition Commissioner Joaquin Almunia said the penalties won’t be “the end of the story” as regulators continue to probe additional cases linked to Libor and currency trading.
“It is only a question of time until the banks pay more,” said Alex Koagne, an analyst with Natixis SA in Paris who has a buy recommendation on Deutsche Bank. “Everybody wants this to end. Investors want to be able to analyze the underlying performance of the banks’ business while the management teams at the banks want to focus on improving that performance.”
Citigroup Inc. has a 70 million-euro penalty and RP Martin Holdings Ltd. was fined 247,000 euros.
The Bloomberg Europe Banks & Financial Services index dropped as much as 1.7% to 102.86, extending a two-day decline to 3.6%, the biggest loss in more than three months. Deutsche Bank shares were trading 1.7% lower at 3:31 p.m. in Frankfurt trading. Societe Generale shares also fell 1.5% in Paris trading.
Zurich-based UBS AG and London-based Barclays Plc weren’t fined because they were the first to inform the EU of the cartels. UBS avoided a potential 2.5 billion-euro fine and Barclays escaped a 690 million-euro penalty. Citigroup also avoided an extra 55 million-euro fine for blowing the whistle on one part of the cartel, the commission said. An EU accord includes a finding of liability that can be used in civil cases.
JPMorgan Chase & Co., London-based HSBC Holdings Plc and Credit Agricole SA pulled out of the Euribor settlement and ICAP Plc withdrew from the Libor negotiations. All four companies continue to face an antitrust probe, the EU said.
“JPMorgan Chase has cooperated 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 New York-based bank said in a statement.