Credit Suisse, Bank of America, Credit Agricole Fined by EU for Bond-Trading Cartel
April 28 2021 - 8:14AM
Dow Jones News
By Anna Hirtenstein
The European Union fined Credit Suisse Group AG, Bank of America
Corp. and Crédit Agricole SA for illegally colluding on trades in
government bond markets at the expense of their clients.
The three banks were together fined EUR28.5 million, equivalent
to $34.4 million. Deutsche Bank AG also participated in the trades,
but wasn't fined because it alerted the EU about the existence of
the alleged cartel.
The EU's executive arm said Wednesday that traders at the banks
worked together on trading strategies, exchanged sensitive price
information and coordinated prices for sovereign bonds denominated
in dollars.
"The cartel harmed the financial markets," said Margrethe
Vestager, European Commission Executive Vice President. She said
the trading restricted competition when fund managers bought and
sold 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 have been
issued by governments. The EU investigation found that traders at
the four banks knew each other and had a "circle of trust."
By communicating confidential trading information over Bloomberg
terminal chat rooms, they avoided competing with each other and
split trades without their clients being aware that they were
dealing with more than one trader.
The commission began its investigation in 2015 after being
tipped off by Deutsche Bank.
Investment banks have been fined for financial markets collusion
in recent years, including trades involving the Libor benchmark
interest rate and currencies. This has led to sizable penalties and
an industrywide shift away from the use of benchmarks that can
easily be rigged.
Credit Suisse was fined EUR11.9 million. A spokesperson said the
case related to a former employee whom it says didn't engage in
anticompetitive conduct. It plans to appeal the decision in
European courts.
The move from the EU is the latest black mark for Swiss lender,
which has come under fire in recent weeks for its involvement in
the collapse of finance firm Greensill Capital and for posting a
$5.5 billion hit from the meltdown of family office Archegos
Capital Management, the highest any bank has divulged to date. The
bank has come under scrutiny from regulators and top shareholders
for failures to manage risk.
Bank of America, which was fined EUR12.6 million, declined to
comment. Crédit Agricole, which was fined almost EUR4 million,
didn't immediately respond to requests for comment.
By informing the EU of the cartel, Deutsche Bank avoided a
EUR21.5 million fine. A bank spokesperson said it is "pleased that
the matter has now been concluded."
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
April 28, 2021 07:59 ET (11:59 GMT)
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