Three years after closing the initial stage in this case, the European Commission announced on Wednesday 7 December that it has decided to fine three banks (Crédit Agricole, HSBC and JP Morgan Chase) a total of €485 million.
The reason? The banks fixed prices (as did competitors fined in 2013 - Deutsche Bank, Société Générale, Royal Bank of Scotland and Barclays Bank) for interbank interest rate derivatives in euro (EURIBOR).
The four banks that had already been fined agreed to a mutual settlement in 2013, unlike the newly fined banks. Competition Commissioner Margrethe Vestager explained at a press conference that they were entitled to do so.
Interest rate derivatives are financial products used by companies to hedge the risk of changes in interest rates or for speculation. Their value depends on the level of EURIBOR. EURIBOR is supposed to correspond to the cost of interbank lending in euros and is determined from the individual rates sent by a panel of banks to a calculation agent on a daily basis.
We understand that after the 2013 decision, Barclays, which had revealed the cartel, provided new elements to the Commission about Crédit Agricole and HSBC, which didn’t provide any new information as such, but backed up what the Commission had already discovered.
The Commission gave a concrete example. On 19 March 2007, ‘the cartelists decided that it would be beneficial to them to have a lower EURIBOR rate on that day. Therefore, already weeks before 19 March, they agreed to submit quotes that would allow them to move the EURIBOR down on the day’ in question. ‘We found a number of chats between traders congratulating each other and thanking each other for the work well done. The participation in such schemes was very lucrative for the banks. Tiny movements of the EURIBOR rate can have a huge impact given the trading volumes at stake.’ The Commission refused to give any further details, seemingly because the language used was very vulgar: ‘This is a close community with a very free language.’ The Commission had to remain vigilant to decode the language used by the traders and to ensure that evidence was not lost in translation.
Crédit Agricole has been fined some 114 million euro for is involvement in the cartel for five months. For its own five-month involvement, JP Morgan Chase will have to pay a fine of 337 million euro. HSBC is being fined 33 million euro for its one-month involvement. When deciding on the fines, the Commission generally takes account of the sales figures made by the banks in the European Economic Area for the products in question, the gravity of the crime, its geographical scope and its duration.
The cartel existed from September 2005 to May 2008 and covered the entire European Economic Area. (Original version in French by Elodie Lamer)