Seven Banks Escape With Minor Fines in Mexico Antitrust Case
Seven Big Banks Escape With Minor Fines in Mexico Antitrust Case
(Bloomberg) -- Mexico’s antitrust watchdog has fined seven banks a total of $1.5 million, only 4% of potential penalties, after finding evidence of price-rigging in the peso bond market early last decade, according to documents seen by Bloomberg News.
Deutsche Bank AG, Barclays Plc, Bank of America Corp., Citigroup Inc.’s local unit Citibanamex, Banco Bilbao Vizcaya Argentaria SA, Banco Santander Mexico SA and JPMorgan Chase & Co. were fined a combined 29.4 million pesos out of a potential 680 million, the document showed. Deutsche Bank and Barclays got the two biggest fines at 8.7 million pesos and 6.35 million pesos, respectively.
The ruling, to be published as early as Monday, follows a four-year investigation by antitrust commission Cofece that was aided by a whistle-blower who came forward in May 2015, the documents showed. Investigators said they found evidence in electronic chats from 2010 to 2013 of cartel behavior in the secondary market.
Eleven traders were fined a total of 5.7 million pesos out of a possible 108.5 million pesos.
| Bank | Maximum Fine (pesos) | Imposed Fine (pesos) | USD |
|---|---|---|---|
| Deutsche | 97,140,000 | 8,703,392.12 | $435,725.16 |
| Barclays | 97,140,000 | 6,350,234.12 | $317,917.05 |
| BofA | 97,140,000 | 5,286,108.90 | $264,642.86 |
| Citibanamex | 97,140,000 | 4,438,947.68 | $222,230.73 |
| BBVA Mexico | 97,140,000 | 3,609,080.44 | $180,684.39 |
| Santander | 97,140,000 | 622,901.26 | $31,184.82 |
| JPMorgan | 97,140,000 | 378,504.32 | $18,949.38 |
A spokesperson for Cofece didn’t respond to a request for comment. The agency is barred from speaking publicly about its rulings until all the parties involved have been notified.
JPMorgan, Bank of America, Citigroup and Deutsche declined to comment. A Santander Mexico spokesperson said it would comment when the decision was made public. The other banks didn’t immediately respond to a request for comment.
The fines are tiny compared to the billions of dollars Barclays and Deutsche paid back in 2015 to settle charges with U.S., U.K. and European regulators. While Cofece can fine companies as much as 10% of their revenues when they engage in cartel-like behavior, banks and traders were fined under a less-harsh statute that set maximums at 200,000 times the country’s daily minimum wage.
The commission ruled Jan. 14 and began notifying banks last week.
In late 2019, the commission’s investigative unit said it found evidence of collusion after a three-year probe that examined 10 years of trader chats and bank records. Cofece looked into potential collusion by banks in central-bank auctions and when selling to funds and clients, the documents showed. But charges were limited to the secondary market.
New Rules
In the wake of the price-fixing probes that followed the 2008-09 global financial crisis, banks implemented tighter restrictions on chat rooms that make collusion harder.
Cofece is under political pressure after Mexican President Andres Manuel Lopez Obrador said this month that lawmakers should fold the functions of the country’s autonomous regulators into federal ministries.
Barclays and JPMorgan agreed last year to pay a combined $20.7 million to settle charges in New York that stemmed from information gathered in the Cofece probe. The U.S. judge later threw out charges against the rest of the banks, arguing he didn’t have jurisdiction over alleged manipulation in Mexico.
Mexico’s securities and banking regulator did its own investigation and fined six global banks and traders in late 2018 a total of a little over $1 million for manipulating bond-trading volumes.
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