Banks to pay record European penalty

Eight banks have agreed penalties with the European Commission over allegations they formed cartels to fix two key interest rates used to set the price of arrangements ranging from mortgages to complex financial “products”.

RBS will pay 391m euros (£325m) for its role in the attempted rigging of the Yen Libor and Euribor – the Tokyo and euro area equivalents of the London interbank offered rate (Libor).

But Barclays is immune from a potential 690m euro (£573m) penalty after blowing the whistle on the Euribor cartel.

The sanctions – the first from the EC on rate manipulation – are the highest yet for European antitrust enforcement.

Barclays and state-backed RBS have already been fined following an investigation into the rigging of Libor, paying penalties of £290m and £391m respectively.

Other banks fined by the EC in the Euribor case are German group Deutsche Bank and French player Societé Génerale.

Those involved in the Yen Libor case are RBS, Swiss group UBS, Deutsche Bank, US giants JPMorgan Chase & Co and Citigroup and UK-based wholesale broker RP Martin.

UBS avoided a hefty 2.5bn euro (£2.1bn) fine after flagging up the Yen Libor cartel with the EC.

Fellow UK bank HSBC is understood to have pulled out of the Euribor settlement talks, beside US group JPMorgan Chase & Co and French group Credit Agricole, while broker ICAP is said to have refused settlement in the Yen Libor probe.

Joaquin Almunia, EC vice-president in charge of competition policy, said: “What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks ... but also the collusion between banks who are supposed to be competing with each other.”