EU fines eight banks over rigging rates

Banks found guilty of being involved in illegal cartels that rigged interest rates, affecting financial instruments.

    EU fines eight banks over rigging rates
    EU fines eight banks an unparalleled sum of 1.7 billion euros ($2.3 billion) for rigging rates.[REUTERS]

    The European Union has fined eight lenders an unprecedented sum of $2.3 billion on Wednesday for rigging interest rates.

    German Deutsche Bank, involved in rigging the Euribor and Japanese yen Tibor rates, was fined a total of $983 million, while the French Societe Generale was fined $605 million for manipulating the European Euribor rate.

    British bank RBS, already mired in controversy, was fined $530 million for involvement in cartels which rigged both rates.

    The European Commission's anti-trust authorities had never previously imposed such big fines overall, the Competition Commissioner, Joaquin Almunia, told a press conference.

    In total, four financial institutions were involved in a cartel which rigged the Euribor rate and six in a cartel which manipulated the Tibor rate.

    In the Euribor case, British bank Barclays benefited from immunity and will not pay a fine because it revealed the existence of the rigging to the Commission.

    The investigations and fines come after a separate scandal broke over the rigging of the London Libor rate which is used as a benchmark for many types of financial contracts around the world.

    The Euribor, Tibor and Libor interest rates are calculated slightly differently, but fulfill a vital function as a reference for the rates which banks are charging to lend each other.

    Contracts covering a vast range of financial instruments and vast amounts of money depend in part on the interest rates indicated by Euribor, Tibor, and Libor.

    SOURCE: Al Jazeera and agencies


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