Two Bank Cartels Connected to Euro Libor Scandal
Cartels are indeed alive in well in the seemingly legitimate business of international banking. The European Commission, in its investigation of the Libor scandal this year has uncovered two international banking cartels that were used to influence the Libor benchmark interest rate and set bid-ask spreads.
Royal Bank of Scotland (RBS) was given immunity by the Commission for revealing the existence of the first banking cartel. JPMorgan Chase was fined the most by the Commission for its alleged involvement in the cartel, approximately $77 MM, for influencing the Libor benchmark rate.
The second banking cartel that was uncovered by the Commission involved an agreement on the price of derivatives versus a manipulation of the Libor. “This way, the banks involved could flout the market at their competitors’ expense. Cartels in the financial sector, whatever form they take, will not be tolerated,” said Joaquin Almunia, competition chief for the EU.
Is the already bad reputation of global banking not bad enough? The alleged involvement of the said banking institution’s involvement in banking cartels is another reason that banks should continue to be regulated.
(Source: FT.com: http://www.ft.com/intl/cms/s/0/91d92280-58fe-11e4-9546-00144feab7de.html?siteedition=intl#axzz3GtZ0DcL9)
Posted by Corey Curwick Dutton
