EU slaps £319m fine on UBS, Nomura and UniCredit for bond cartels

The EU’s antitrust office has fined UBS Group, Nomura Holdings and UniCredit £319m for participating in a European Government Bonds (EGB) trading cartel.

The European Commission found seven investment banks guilty of breaching its antitrust rules during the 2008 global financial crisis for alleged involvement in foreign exchange cartels, Euribor and Libor benchmark cartels, and bonds cartels with three of the banks receiving fines.

The institutions participated in a “bonds trading cartel” in the primary and secondary market for European government debt between 2007 and 2011, the commission said a statement. Traders used chatrooms to exchange commercially sensitive information, discussing their bidding strategies in the run-up to debt auctions, it added.

The EGB is a type of bond issued in euro by the central governments of EU member states. The bond trades that put the banks in trouble occurred between 2007 and 2011. The regulator said the banks’ conduct affected the entire European economic area.

UBS bore the heaviest burden, receiving a fine of €172.4m. The burden would have been greater had the regulator not reduced the possible fine by 45% because the bank cooperated with the investigation.

Nomura was fined €129.6m and UniCredit took a €69.4m hit. The regulator chose not to fine Bank of America, NatWest, Natixis and WestLB despite finding they too participated in the anticompetitive bond trading behaviour. NatWest escaped the fine because it reported the cartel to the regulator. Bank of America and Natixis were not fined because their infringement falls outside the limitation period for imposition of fines while Portigon was exempt because it generated zero net turnover in the last business year.

European Competition Commissioner Margrethe Vestager said in a statement, “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 behaviour.”

Vestager added, “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.”

All three banks in statements said that they were considering or planning to appeal.

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