Can the EU Convince Banks to Settle Over the Libor Scandal?
Joaquin Almunia, VP and commissioner for competition of the European Commission, wants to end the dark chapters in financial history that are the Libor and Euribor rate-fixing scandals as soon as possible. As the European Union’s top antitrust official, he has led an 18-month long investigation into a number of euro-zone banks suspected of rigging the Libor, the Euribor, and other major benchmarks, and he thinks it is now time to settle.
Unnamed sources familiar with the Commission’s investigation told Reuters that Almunia wants to close the case by the end of the year. This means offering settlements with reduced fines in exchange for early action. If banks refuse to settle — and many are unwilling, because they believe the charges are unfounded — they could face penalties of up to 10 percent of their annual revenue. That rate could multiply for individual banks if they are found guilty of manipulating more than one benchmark.
The Commission’s actions are separate from penalties issued by regulators in the United States and the United Kingdom. Three major financial institutions — The Royal Bank of Scotland Group (NYSE:RBS), Barclays (NYSE:BCS), and UBS (NYSE:UBS) — have already been hit with multimillion-dollar fines because of their involvement in the scandal.