 |
| Hester: The ‘wrongdoings taint a whole industry |
Several banks under investigation for suspected rigging of euro interest rates have joined Deutsche Bank in giving information to EU antitrust regulators in the hope of lower fines if they are found guilty, two people familiar with the matter said yesterday.
The European Commission is investigating possible manipulation of the Euro Interbank Offered Rate (Euribor) benchmark rate at which banks lend in euros to each other.
The EU watchdog has not disclosed the names of the banks being investigated. They face fines of up to 10% of their global revenues if found to have breached EU antitrust rules.
Deutsche Bank, which sources say is already co-operating with the authorities, had revenues last year of €33.2bn.
“Several banks have come forward with information to the Commission,” said one of the sources, who declined to be identified because of the sensitivity of the matter. This person declined to provide more details.
The second person said there could be at least two banks, besides Deutsche Bank, which have sought leniency under the European Commission’s scheme to encourage whistleblowers.
A total of 43 banks sit on the Euribor panel, which is hosted by the European Banking Federation. The rate is used as a reference for trillions of euros in euro-denominated loans and debt instruments.
Under the Commission’s leniency policy, the whistleblower gets off scot-free. Fines can be reduced by 30 to 50% for the next company to provide evidence of wrongdoing, and by 20 to 30% for the following applicant. Subsequent applicants can get a reduction in any penalty of up to 20%.
To qualify, companies must provide what the regulator terms “significant added value” information.
The Commission is also investigating possible manipulation of the London Interbank Offered Rate (Libor) and the Tokyo Interbank Offered Rate (Tibor).
Manipulation of Libor, which is used to set prices for trillions of dollars of financial products around the globe, has already landed Barclays with $453mn in penalties from US and British regulators, and cost chief executive Bob Diamond his job. The rate-fixing scandal threatens to drag in several other banks.
Regulators in the US, Japan and Singapore are also investigating various interest rate benchmarks.
Thomson Reuters Corporation is the British Bankers’ Association’s official agent for the daily calculation and publishing of Libor.
Meanwhile, Royal Bank of Scotland chief executive Stephen Hester said in a newspaper interview published yesterday that the bank faced the prospect of fines linked to the Libor interest rate-rigging scandal.
“RBS is one of the banks tied up in Libor. We’ll have our day in that particular spotlight as well,” Hester told The Guardian newspaper.
Hester said he was not aware of the size of the RBS fine but added that the investigation by British regulator, the Financial Services Authority was “in process”.
RBS, which is government-owned after a vast bailout at the height of the global financial crisis, will report its first-half results on Friday.
Hester told The Guardian that the Libor fines would centre on the conduct of a “handful” of employees at the affected banks.
“Even though, when all the Libor (fines) are out, most of it is going to be around the wrongdoings of a handful of people at a number of banks,” he told the newspaper.
“Those wrongdoings taint a whole industry beyond the handful of people and that makes it a huge problem.”