Society

EU Competition Commission Issues Massive Fine To Banks For Rigging Benchmarks

| by Will Hagle

Antitrust regulators working on behalf of the European Union handed down a whopping fine of 1.71 billion euros for rigging financial benchmarks. 

According to Reuters, this fine is “the biggest yet to be handed down to banks for rigging the benchmarks used to determine the cost of lending.” The banks penalized were Deutsche Bank, Royal Bank of Scotland, Citigroup, Societe General, JPMorgan and brokerage RP Martin. The penalty against JPMorgan arrives just a few weeks after the bank was issued a huge fine by the U.S. government for its involvement with the housing bubble scandal that led to the 2008 economic crash. 

The biggest fine of all the banks, however, was issued to Deutsche Bank for the amount 725.36 million euros. 

EU Competition Commissioner Joaquin Almnuia explained that the fine was issued because the major banks of Europe had been colluding with each other rather than engaging in fair competition.

“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,”  Almunia siad. 

Deutsche Welle explains that the benchmarks were manipulated in order to improve the “investment positions” of the six particular banks when it came to assets such as mortgages and derivatives. The fee marks the highest ever issued by the EU’s Competition Commission, which is headed by Almnuia.