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EU Commission Punish 5 Banks €344 million for Leaking Sensitive Information

by Exposed
February 3, 2022 - Updated on September 13, 2022
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EU Commission imposed heavy fines on 5 of the biggest European Banks in an anti-trust case. UBS, RBS, HSBC, Credit Suisse, and Barclays are slapped with a fine for participating in a Foreign Exchange spot trading cartel ‘Sterling Lads.’

Commenting on the case, Margrethe Vestager— EU Antitrust Chief— said, “the collusive behaviour of the five banks undermined the integrity of the financial sector at the expense of the European economy and consumers.”

She also added, “Our cartel decisions to fine UBS, Barclays, RBS, HSBC and Credit Suisse send a clear message that the Commission remains committed to ensure a sound and competitive financial sector that is essential for investment and growth.”

EU Commission and EU flags
EU Commission and EU flags

The investigation mainly focused on G10 currencies—the most liquid and widely traded currencies.

When Liquidity Providers— big investment companies like banks, pension funds, asset managers, hedge funds— exchange a massive amount of various currencies, forex traders act as facilitators.

The Commission disclosed that some traders in charge of trading G10 currencies exchanged sensitive information and shared trading plans on behalf of the aforementioned banks.

Such information facilitated traders to make well-informed decisions about when, where, and which currency to trade.

In contrast, generally, traders work independently and take inherent risks while taking such steps.

EU Commission directed to fine four big banks— other than Credit Suisse— an amount of 261 million euros.

These four banks decided to settle the case and were given a 10% reduction to the fines as per the 2008 Settlement Notice. Under the Leniency Notice of 2006, UBS of Switzerland enjoyed complete immunity for revealing the existence of the cartel.

In contrast, Credit Suisse is dealt with ordinary procedures for non-cooperation under Settlement and Leniency notices. See a similar story where US Bank uses customer data to open fake accounts.

Here’s the breakdown of fines imposed on these banks;

Forex (Sterling Lads)
Decision Company Reduction under Leniency Notice (%) Reduction under Settlement Notice (%) Fine (€)
Settlement UBS 100 10 0
RBS 50 10 32 472 000
Barclays 30 10 54 348 000
HSBC 15 10 174 281 000
Ordinary procedure Credit Suisse 0 0 83 294 000

Source 1: EU Commission

Where do bank fines go? Bank fines aren’t used for any particular cause. Instead, these are added to the EU general budget. This results in a deduction from member states’ budget for the following year. Resultantly helping the EU operations and reducing taxpayers’ contributions.

EU will remain competent for this case as it was initiated before the end of the transition period. According to the EU-UK withdrawal agreement, the EU shall reimburse the UK for its share of the fine— once it has been definitive.

Collection, calculation, and reimbursement will all be done by EU Commission.

UBS, the whistleblower bank, said it is pleased that the matter is resolved. RBS or currently known as NatWest, says, “pleased to have reached this settlement regarding serious misconduct that took place in a single chatroom, and that involved a former employee of the bank, around a decade ago.”

While other banks refrained from commenting on the development.

Over similar conduct back in 2019, The EU Commission has already sanctioned some of these banks for featuring chatrooms named “Essex Express”, “Three-Way Banana Split”, “Semi Grumpy Old Men”, and “Only Marge.”

Sources

  • Politico
  • EU Commission
Tags: conspiracycorruptionfraudmoney laundering
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