Credit Suisse, Bank of America, Credit Agricole Fined by EU for Bond-Trading Cartel -- Update

By Anna Hirtenstein 

The European Union fined Credit Suisse Group AG, Bank of America Corp. and Crédit Agricole SA for illegally colluding on trades in government bond markets at the expense of their clients.

The three banks were together fined EUR28.5 million, equivalent to $34.4 million. Deutsche Bank AG also participated in the trades, but wasn't fined because it alerted the EU about the existence of the alleged cartel.

The EU's executive arm said Wednesday that traders at the banks worked together on trading strategies, exchanged sensitive price information and coordinated prices for sovereign bonds denominated in dollars.

"The cartel harmed the financial markets," said Margrethe Vestager, executive vice president of the European Commission. She said the trading restricted competition when fund managers bought and sold bonds on behalf of investors and retirees.

The trading took place in secondary markets, where bonds are bought and sold between banks and investors after they have been issued. The issuers include European institutions, governments and agencies such as the European Investment Bank and German state, as well as non-European sovereign and agency issuers.

By communicating confidential trading information over Bloomberg terminal chat rooms, they avoided competing with each other and split trades without their clients being aware that they were dealing with more than one trader.

The commission began its investigation in 2015 after being tipped off by Deutsche Bank. The collusion took place between 2010 and 2015.

Investment banks have been fined for financial markets collusion in recent years, including trades involving the Libor benchmark interest rate and currencies. This has led to sizable penalties and an industrywide shift away from the use of benchmarks that can easily be rigged.

Credit Suisse was fined EUR11.9 million. A spokesperson said the case related to a former employee whom it says didn't engage in anticompetitive conduct. It plans to appeal the decision in European courts.

The move from the EU is the latest black mark for Swiss lender, which has come under fire in recent weeks for its involvement in the collapse of finance firm Greensill Capital and for posting a $5.5 billion hit from the meltdown of family office Archegos Capital Management, the highest any bank has divulged to date. The bank has come under scrutiny from regulators and top shareholders for failures to manage risk.

Bank of America, which was fined EUR12.6 million, declined to comment. Crédit Agricole, which was fined almost EUR4 million, didn't immediately respond to requests for comment.

By informing the EU of the cartel, Deutsche Bank avoided a EUR21.5 million fine. A bank spokesperson said it is "pleased that the matter has now been concluded."

Write to Anna Hirtenstein at [e-mail]

(END) Dow Jones Newswires

April 28, 2021 09:04 ET (13:04 GMT)

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