Banks accused of rate fixing seek leniency

Several banks under investigation for suspected rigging of euro interest rates are co-operating with EU anti-trust regulators in the hope of lower fines, according to two sources.

The move by the banks to voluntarily disclose more about their knowledge of possible manipulation of the euro interbank offered rate (Euribor) is effectively an admission of wrongdoing and shows growing nervousness that they, like Barclays, face a heavy penalty.

The European Commission is investigating possible manipulation of Euribor, the benchmark used when pricing bank lending in euro.

The EU watchdog has not disclosed the names of the banks being probed. They could face fines of up to 10% of their global revenues if found to have breached EU rules.

Earlier this month, sources told Reuters that Deutsche Bank, was already co-operating with the authorities. The lender had revenues last year of €33.2bn.

“Several banks have come forward with information to the Commission,” said the sources.

The sources said there could be at least two banks, besides Deutsche Bank, which have sought leniency under the European Commission’s scheme to encourage whistleblowers. The EU Commission spokesman for competition policy, Antoine Colombani, declined to comment.

Leniency applicants, which in effect are admitting wrongdoing, could find themselves targeted by disgruntled investors, fund managers and investment funds, said Morten Nissen, a partner at law firm Bird & Bird.

Barclays, Deutsche Bank, Citibank, Lloyds, HSBC, JP Morgan and RBS are some of the banks the subjects of lawsuits in the US tied to Libor.

A total of 43 banks sit on the Euribor panel, which is hosted by the European Banking Federation. The rate is used as a reference for trillions of euro in euro-denominated loans and debt instruments.

Under the Commission’s leniency policy, companies must provide what the regulator terms “significant added value” information.