European Commission fines Crédit Agricole for allegedly taking part in Euribor cartel

The world’s largest co-operative by turnover, Crédit Agricole, has been fined €114.7m by the European Commission for participating in a cartel in euro interest rate derivatives. Two other banks, JP Morgan...

The world’s largest co-operative by turnover, Crédit Agricole, has been fined €114.7m by the European Commission for participating in a cartel in euro interest rate derivatives.

Two other banks, JP Morgan Chase and HSBC, were also fined by the Commission, which says they colluded on euro interest rate derivative pricing elements, and exchanged sensitive information, in breach of EU antitrust rules.

The decision follows an investigation that started in 2011 under the Commission’s standard cartel procedure. The Commission says the investigation found a cartel in place between September 2005 and May 2008 involving seven banks: Barclays, Crédit Agricole, HSBC, JPMorgan Chase, Deutsche Bank, RBS and Société Générale.

Back in 2013 the Commission reached a settlement regarding the same cartel with four of the banks, Barclays, Deutsche Bank, RBS and Societé Générale, who admitted guilt and were fined €824.6m.

Crédit Agricole, JP Morgan Chase and HSBC chose not to settle.

The fines for each bank were set on the basis of the Commission’s 2006 Guidelines on fines and depended on a bank’s value of sales for the products concerned within the EEA, the nature of the infringement, its geographic scope and its duration.

European Commissioner Margrethe Vestager said: “These derivatives are traded globally on international money markets worth trillions of euros. Companies use them to manage their interest rate risks and reduce uncertainty in the business environment. We can think of these products as a sort of insurance policy against interest rate fluctuations.

“So, you can imagine what is at stake if this market is rigged to benefit only a few. This is exactly what the seven banks did: over different periods between 2005 and 2008, participating traders were in regular contact through corporate chat rooms or instant messaging services. They exchanged confidential and sensitive information about their trades and strategy.”

The Commissioner added that the aim of the cartel had been to distort a pricing component for euro interest rate derivatives, the so-called Euro Interbank Offered Rate (Euribor).

“Euribor is set based on quotes submitted daily by a panel of banks. The seven cartelists were part of this panel. The traders involved tried to submit quotes in order to either move Euribor up or down, depending on what benefitted them. On days when a trader received money calculated on the basis of Euribor, he had an interest in a high rate. On days when he needed to pay, he would want a low rate,” she added.

Crédit Agricole and JPMorgan Chase (€337.1m) were fined for participating in cartel for five months, while HSBC was fined for one month of participation (€33.6m).

A written statement by Crédit Agricole said: “Crédit Agricole takes note of today’s decision of the European Commission in the Euribor case.

“Crédit Agricole firmly believes that it did not infringe competition law. Accordingly, it will appeal the Commission’s decision before the European courts. Payment of the fine will not affect the 2016 financial statements given the provisions set aside previously.”

Commenting on the decision, HSBC and JP Morgan have also denied participating in an anti-competitive cartel and said they would appeal.

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