Bloomberg News

EU Antitrust Regulators Probing Collusion Over Libor Derivatives

February 20, 2012

Feb. 17 (Bloomberg) -- European Union antitrust regulators are probing possible collusion between companies involved in derivatives trading based on the London interbank offered rate, or Libor.

“We have been investigating for several months Libor-based interest-rate derivatives for several currencies,” said Antoine Colombani, a spokesman for the European Commission in a phone interview. Regulators are concerned that companies active in the industry may have breached EU cartel rules, he said.

Barclays Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc have said they were quizzed by the EU over the possible breach of rules governing the Libor benchmark borrowing rate, adding to similar probes by U.S., U.K., Swiss and Canadian regulators.

Colombani declined to comment on whether the Libor probe was based on information from one or several companies. Supplying evidence used to sanction other members of a cartel can win a company immunity from fines of as much as 10 percent of yearly sales.

The Brussels-based commission is “intensifying” its “antitrust scrutiny on wholesale financial markets,” EU Competition Commissioner Joaquin Almunia said last month. Almunia started a separate probe into Goldman Sachs Group Inc., JPMorgan Chase & Co. and 14 other investment banks over agreements in the market for credit-default swaps that may harm competition last year.

The EU’s antitrust agency in October raided banks that offer financial derivatives linked to the Euro Interbank Offered Rate, saying they were investigating possible collusion. That probe is continuing, Colombani said.

Conditional Immunity

UBS AG, Switzerland’s biggest bank, has received conditional immunity from the Swiss Competition Commission as part of an investigation into suspected manipulation of the Yen Libor, Tibor and Swiss franc Libor rates. It was granted similar immunity by the U.S. Department of Justice last year as part of its probes of Yen Libor and Euroyen Tibor rates.

Libor rates, a benchmark for more than $350 trillion of financial products worldwide, are based on data from banks reflecting how much it would cost them to borrow from each other for various periods of time in currencies including dollars, euros and yen. The rates are compiled daily.

--Editors: Peter Chapman, Heather Smith

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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