Credit Suisse, Bank of America and Credit Agricole fined by EU for bond trading cartel
European Union fines Credit Suisse Group AG
, Bank of America Corp.
and Crédit Agricole SA for illegal collusion on transactions on government bond markets to the detriment of their clients.
The three banks were jointly fined 28.5 million euros, or $ 34.4 million. German Bank AG
was also involved in the deals, but was not fined for alerting the EU to the existence of the alleged cartel.
The EU’s executive arm said on Wednesday that bank traders had worked together on trading strategies, exchanged price sensitive information and coordinated the prices of dollar-denominated sovereign bonds.
“The cartel has hurt financial markets,” said Margrethe Vestager, executive vice-president of the European Commission. She said trading restricts competition when fund managers buy and sell bonds on behalf of investors and retirees.
The trading took place in secondary markets, where bonds are bought and sold between banks and investors after they are issued. Issuers include European institutions, governments and agencies such as the European Investment Bank and the German state, as well as sovereign issuers and non-European agencies.
By communicating confidential business information through the Bloomberg Terminal discussion forums, they avoided competing and separating transactions without their customers knowing they were dealing with more than one merchant.
The commission began its investigation in 2015 after being informed by Deutsche Bank. The collusion took place between 2010 and 2015.
Investment banks have been fined for colluding in financial markets in recent years, especially for transactions involving the benchmark interest rate Libor and currencies. This has led to significant penalties and an industry wide abandonment of the use of benchmarks that can easily be rigged.
Credit Suisse was fined 11.9 million euros. A spokesperson said the case involved a former employee who he said had not engaged in anti-competitive behavior. He plans to appeal the decision to European courts.
The EU move is the latest black mark for the Swiss lender, which has come under fire in recent weeks for its involvement in the collapse of finance firm Greensill Capital and for taking a hit of $ 5.5 billion following the collapse of the Archegos Capital Management family office, the highest a bank has disclosed to date. The bank has come under scrutiny from regulators and major shareholders due to its inability to manage risk.
Bank of America, which was fined € 12.6 million, declined to comment. Crédit Agricole, fined nearly 4 million euros, did not immediately respond to requests for comment.
By informing the EU of the cartel, Deutsche Bank avoided a fine of 21.5 million euros. A spokesperson for the bank said he was “happy the matter is now settled.”
Write to Anna Hirtenstein at [email protected]
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Appeared in the print edition of April 29, 2021 under the title “EU fines for collusion in commerce”.