€371 million: EU fines Nomura, UBS, and UniCredit for cartel on government bonds

Rick Steves

The conduct partially took place during the financial crisis and more specifically between 2007 and 2011, and affected the entire European Economic Area. Bank of America, Natixis, RBS (now NatWest), and WestLB (now Portigon) were also found guilty but escaped the fines.

The European Commission has fined several banks a total of €371 million for breaches of the EU antitrust rules through the participation of a group of traders in a cartel in the primary and secondary market for European Government Bonds.

Bank of America, Natixis, Nomura, RBS (now NatWest), UBS, UniCredit, and WestLB (now Portigon) were found guilty of conspiring in the European bond markets, but Natwest was not fined as it revealed the cartel to the Commission.

Bank of America and Natixis were not fined either because their infringement falls outside the limitation period for imposition of fines.

Portigon, the legal and economic successor of WestLB, received a zero fine as it did not generate any net turnover in the last business year which served as a cap to the fine.

The seven investment banks participated in a cartel through a group of traders working on their EGB desks and operating in a closed circle of trust.

These traders were in regular contact with each other mainly in multilateral chatrooms on Bloomberg terminals. In these chatrooms, the relevant traders exchanged commercially sensitive information. They informed and updated each other on their prices and volumes offered in the run up to the auctions and the prices shown to their customers or to the market in general.

They discussed and provided each other with recurring updates on their bidding strategy in the run up to the auctions of the Eurozone Member States when issuing Euro denominated bonds on the primary market, and on trading parameters on the secondary market.

The conduct partially took place during the financial crisis and more specifically between 2007 and 2011, and affected the entire European Economic Area (‘EEA’).

The behavior of the seven banks violates EU rules that prohibit anticompetitive business practices such as collusion on prices (Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement).

Executive Vice-President of the Commission Margrethe Vestager said: “A well-functioning European Government Bonds market is paramount both for the Eurozone Member States issuing these bonds to generate liquidity and the investors buying and trading them.

“Our decision against Bank of America, Natixis, Nomura, RBS, UBS, UniCredit and WestLB sends a clear message that the Commission will not tolerate any kind of collusive behavior. It is unacceptable, that in the middle of the financial crisis, when many financial institutions had to be rescued by public funding these investment banks colluded in this market at the expense of EU Member States.”

The European Commission fined Nomura nearly €130 million, while UBS was fined €172 million, and UniCredit will have to pay €69 million.

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