For illegally colluding in trades in the government bond markets, at the detriment of its customers, the European Union fined Credit Suisse Group AG, Bank of America Corp. and Crédit Agricole SA. The three banks were fined a total of €28.5 million, or $34.4 million. Deutsche Bank AG also invested in the trades but was not charged because it informed the EU about the suspected cartel’s presence.
According to the EU’s executive arm, traders at the banks collaborated on trading plans, shared sensitive pricing details, and coordinated rates for sovereign bonds denominated in dollars on Wednesday. The cartel affected financial markets, according to Margrethe Vestager, executive vice president of the European Commission. She said that the trading hindered competition as investment managers purchased and sold bonds on behalf of clients and retirees. The trade took place in secondary markets, where bonds are bought and sold by banks and investors after they have been released.
European institutions, governments, and agencies, such as the European Investment Bank and the German government, are among the issuers, as are non-European sovereign and organization issuers. They stopped interfering with each other and broke trades without their customers realizing they were working with several traders by sharing confidential trading details over Bloomberg terminal chat rooms.
Between 2010 and 2015, a conspiracy was created and after a tip from Deutsche Bank, the commission launched its investigation in 2015. In recent years, investment banks have been fined for colluding in the capital markets, including transactions such as the Libor interest rate and currencies. As a result, there have been significant fines imposed, as well as a shift in the market away from easily rigged benchmarks.
Credit Suisse was hit with an €11.9 million fine. According to a spokeswoman, the case involved a former employee who, according to the company, did not partake in anticompetitive behaviour. It intends to appeal the issue to European courts. The EU’s move is the latest blemish on the Swiss lender, which has been chastised in recent weeks for its role in the bankruptcy of financial company Greensill Capital and for reporting a $5.5 billion loss from the collapse of family office Archegos Capital Management, the highest loss divulged by any bank to date. In the event of a risk management failure, the bank has been examined by regulators and top shareholders. Bank of America has refused to comment and has been fined €12,6 million. The nearly €4 million fined Crédit Agricole did not respond immediately to requests for comment. Deutsche Bank has spared a 21.5 million euro fine by reminding the EU of the cartel. A bank spokesperson said the matter has now been concluded with pleasure.
Probes of European Union
The European Union has lagged far behind the financial authorities of the United States or the United Kingdom. EU officials in a foreign currency rigging test involving other banks are currently testing Credit Suisse. An official EU hearing was held in 2019, which normally represents a precursor for fines, concerning RBS and Nomura Holdings Incorporation. The bank’s employees exchanged confidential trade information, coordinated price-referencing for consumers and/or the industry and synchronized trade activity with secondary bond markets between 2009 and 2015, the EU said.
The EU has decided to refrain or withdraw offers to avoid actively competing. They often break up businesses and merge or reduce their roles in order to satisfy the demand of a client. This was achieved with the absence of customer experience of many traders, which meant in practice a small option for the customer, says the European Union. Regulators also said that fines prove that, in all sectors including the financial industry, the EU is committed with regard to anti-competitive activities.