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EU fines banks over rate-rigging EU fines banks over rate-rigging
(34 minutes later)
The European Commission has fined eight banks - including RBS - a total of 1.7bn euros (£1.4bn) for forming illegal cartels to rig interest rates.The European Commission has fined eight banks - including RBS - a total of 1.7bn euros (£1.4bn) for forming illegal cartels to rig interest rates.
It said the banks had acted as a cartel in markets for financial derivatives. The cartels operated in markets for financial derivatives, which are products used to manage the risk of interest rate movements.
Interest rate derivatives are financial products used to manage the risk of interest rate movements. Two of the eight, Barclays and UBS, were excused their financial penalties for revealing the cartels' existence.
The Commission vice-president, Joaquin Almunia, said it was shocking that banks supposed to be in competition were colluding with each other. The Commission said it was shocking that competing banks were in collusion.
A number of banks were engaged in the rigging of interest rate products intended to reflect the cost of interbank lending in euros, while another group fixed prices for products based on the Japanese yen.
Some have been fined for engaging in price-fixing in both markets.
'Scandal'
Aside from RBS, Barclays and UBS, the other organisations involved were Deutsche Bank, which received the biggest fine of 725.36m euros, Societe Generale, JP Morgan, Citibank and the brokers RP Martin.
Banks that have not yet settled fines but are being investigated are HSBC and Credit Agricole, as well as JPMorgan, which accepted a fine for rigging in one market but not another.
Joaquin Almunia, the commission's vice-president in charge of competition policy, said: "What is shocking about the... 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.
"Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few."