UBS Fined for Rigging European Bond Trading
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The European Commission censured seven investment banks for maintaining a cartel on European government bond-trading. The Swiss bank was hit with the largest fine, despite cooperating.
Brussels extracted a total of 371 million euros ($453 million) on UBS, UniCredit, and Nomura for a seven-bank ring which colluded between 2007 and 2011 on prices and volumes of European government bonds, the commission said in a statement on Thursday.
The other banks censured in the cartel were not fined: Natwest had blown the whistle on it, while Bank of America and Natixis escaped because their wrong-doing fell outside of a time period for which fines could be levied. Lastly, WestLB, now Portigon, generated zero revenue from the scheme in the last business year, capping its potential fine at nil.
UBS, which racked up the biggest fine (174.2 million euros), told domestic agency AWP that it is considering an appeal. The fine will take roughly $100 million out of UBS’ second-quarter results, it said.
The Swiss bank’s fine would have been 45 percent higher had it not cooperated with the commission, overseen by Brussels’ anti-trust chief Margrethe Vestager. The commission fined Nomura 130 million euros and Italy’s Unicredit, now run by UBS’ former top investment banker Andrea Orcel, 69 million euros.
Questions & Answers
Q.Which specific banks were fined by the European Commission for their involvement in the bond-trading cartel?
Which specific banks were fined by the European Commission for their involvement in the bond-trading cartel?
The European Commission levied fines against UBS, UniCredit, and Nomura for their participation in the cartel. UBS received the largest fine, despite cooperating with the investigation.
Q.What was the total value of the fines issued by the European Commission for this cartel activity?
What was the total value of the fines issued by the European Commission for this cartel activity?
The European Commission extracted a total of 371 million euros (equivalent to $453 million) from the three fined banks. This amount covers the illicit activities of a seven-bank ring.
Q.Why were some of the banks involved in the cartel not issued a fine by the European Commission?
Why were some of the banks involved in the cartel not issued a fine by the European Commission?
Natwest was not fined because it blew the whistle on the cartel. Bank of America and Natixis escaped fines as their wrongdoing fell outside the eligible fining period. WestLB generated no revenue from the scheme, capping its fine at nil.
Q.What financial impact will the fine have on UBS's upcoming results?
What financial impact will the fine have on UBS's upcoming results?
UBS stated that the fine will reduce its second-quarter results by roughly $100 million. The bank is also considering an appeal against the penalty imposed by the European Commission.
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