EU Fines Banks In Record Penalty (12/5)     Print

By Leah Katherine Bewley, European Affairs Editorial Assistant

The European Union is fining at least six large banks for manipulating financial benchmarks, totaling $2.3 billion. Deutsche Bank has received the largest fine of 725.36 million euros. The Royal Bank of Scotland, Citigroup, Societe General, JPMorgan and brokerage RP Martin are also facing stiff fines. These are the most serious consequences to banks emerging from the financial crisis.

The benchmarks under manipulation were the London InterBank Offered Rate (Libor), the Tokyo interbank offered rate and the money-marker rate for the euro (Euribor). EU Competition Commissioner Joaquin Almunia stated, “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.” The benchmarks are used to price trillions of dollars in assets including mortgages and derivatives.

Some banks like Barclays managed to avoid sanctioning by fully cooperating with the Commission, while others such as HSBC plan to resist the fine and defend against the charges. The EU is further investigating other cases linked to Libor and currency trading. As Joaquin Almunia stated, the penalties will not be “the end of the story” to this scandal.