Banks in Showdown With EU Over Bond Cartel, MLex Reports
Banks in Showdown With EU Over Bond Cartel, MLex Reports
(Bloomberg) -- Royal Bank of Scotland Group Plc, Nomura Holdings Inc., State Street Corp. and Natixis SA met for a behind-closed-doors showdown with European Union watchdogs who’ve accused them of taking part in a suspected government bond cartel, MLex reported.
The European Commission hearing in Brussels ran for three days from Oct. 22-24, MLex wrote, without saying where it got the information. Bank of America Corp., UBS Group AG, UniCredit SpA and Portigon AG were also implicated in the investigation, MLex added. UniCredit previously acknowledged its involvement in the probe and warned of a potential fine. Nomura has also said it is part of the case.
A hearing gives the banks the chance to push back against EU charges that they may have colluded in the trading of euro government bonds from 2007 to 2012, a time-span covering the European sovereign debt crisis that saw bond yields soar. Making arguments in front of regulators is one of the last chances for companies to defend themselves before officials decide on potentially hefty fines.
‘Collusive Scheme’
The EU said in January it sent a statement of objections to eight companies it didn’t name for "a collusive scheme that aimed at distorting competition" for trading sovereign bonds issued by euro-area governments. Traders swapped commercially sensitive information and coordinated on trading strategies, mainly via online chatrooms, it said at the time.
Natixis and Nomura declined to comment on the reported meeting, as did the European Commission and Bank of America. The other banks didn’t respond to requests for comment.
The first company to inform officials of an illegal cartel usually escapes fines. UBS has won immunity from several other EU cartel investigations. Under EU rules, there is also a limitation period of five years from the end of the alleged infringement until the beginning of the commission’s investigation.
While the EU’s powerful antitrust arm often lags far behind financial authorities in the U.S. and the U.K. in punishing collusion between traders, its fines can be hefty. Citigroup Inc., RBS and JPMorgan Chase & Co. are among five banks that agreed in May to pay EU fines totaling 1.07 billion euros ($1.2 billion) for colluding on foreign-exchange trading strategies.
In December, the EU also stepped up a probe into the trading of U.S. dollar supra-sovereign, sovereign and agency bonds. Deutsche Bank AG, Credit Suisse Group AG and Credit Agricole SA said they were among the four banks in the investigation. Bank of America was identified as the fourth bank, two people with the case said at the time.
--With assistance from Stephanie Bodoni and Viren Vaghela.
To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Marion Dakers
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