EU slaps record fine on banks

A group of leading European and American banks had been fined a record 1.71 billion euros ($2.3 billion), the EU Commission announced Wednesday.

Germany's Deutsche Bank was facing the stiffest penalty with a total fine of 725 million euros, followed by France's Societe Generale with 446 million euros and Britain's Royal Bank of Scotland with 391 million euros, the European Union's executive body said.

The US lenders JP Morgan and Citigroup faced fines of between 70 and 80 million euros, while the British broker firm RP Martin was hit with penalties to the tune of 247,000 euros. Britain's Barclays and Switzerland's UBS escaped fines for blowing the whistle on the rate-rigging cartels.

EU Competition Commissioner Joaquin Almunia said the most shocking aspect of the cartel was the collusion between banks who were supposed to be competing with each other.

The six banks had been found guilty of manipulating a total of three interest rate benchmarks, including the so-called London Interbank Offered Rate (Libor) as well as its equivalents in Japan and Europe, the Commission said.

The three benchmarks are used to price hundreds of trillions of euros in assets ranging from mortgages to derivatives. Several employees of the six banks colluded to manipulate those benchmarks in order to improve their investment positions.

Global banking authorities have so far fined lenders UBS, Royal Bank of Scotland, Barclays, Rabobank and broker ICAP a total of $3.7 billion for manipulating rates.

uhe/ccp (Reuters, AFP, dpa)