- Citi, HSBC, Morgan Stanley and Royal Bank of Canada have all been fined
- RBC has the biggest fine of £34.2m, while Citi will pay just £17.6m
Competition regulators have fined four major banks more than £100million for sharing sensitive information on the purchase and sale of UK government debt.
Employees at Citi, HSBC, Morgan Stanley and Royal Bank of Canada all unlawfully exchanged information about gilt trades via one-to-one chat rooms, the Competition and Markets Authority (CMA) said on Friday.
Deutsche Bank also engaged in the conduct but has been granted immunity after alerting authorities to its participation.
RBC was hit with the biggest fine of £34.2million, while Morgan Stanley’s penalty came to £29.7million.
HSBC was fined £23.4million while Citi took a hit of just £17.6million, having been given a 35 per cent ‘leniency discount’.
Each of the four’s fines included 10 to 20 per cent reductions for settling before the CMA issued its ‘statement of objections’ – a notice firms receive saying they are under investigation for violating competition law.
The CMA said the activities took place from 2009 to 2013 and involved individual traders at two banks sharing ‘competitively sensitive’ information regarding the pricing of UK gilts in separate bilateral online Bloomberg chatrooms.
Breaking rules: Employees at Citi, HSBC, Morgan Stanley and Royal Bank of Canada all unlawfully exchanged information about gilt trades via one-to-one chat rooms, the CMA said
Gilts are bonds issued by the UK Government as a way to borrow money for public spending, which pays interest to their investor on top of the principal.
The last exchanges happened in 2010 for HSBC, 2012 for Morgan Stanley, and 2013 for Citi, RBC and Deutsche Bank.
Traders at the latter two financial services firms swapped information on 41 distinct dates between November 2009 and April 2013.
Juliette Enser, executive director of competition enforcement at the CMA, said: ‘We are pleased that we have been able to settle these 5 cases involving the past sharing of competitively sensitive information about pricing.’
She added: ‘The fines imposed today reflect the CMA’s commitment to dealing with competition law breaches and deterring anti-competitive conduct.
‘The fines would have been substantially higher had the banks not already taken unusually extensive steps to make sure that this doesn’t happen again.’
The CMA noted that the banks have all enacted ‘extensive compliance measures’ to prevent future collusion.
It said the fines, which banks have until 22 April to pay, reflected these compliance measures and the amount of time since the infringements ended.
HSBC’s penalty comes just after the bank pushed back a target for its operations to become net-zero by two decades to 2050 as it admitted efforts to cut emissions had been ‘slower than we anticipated’.
Campaigners and members of parliament have also criticised the bank for blocking £978million in pension savings from tens of thousands of Hong Kongers exiled in Britain. HSBC claims that it cannot pay out the money due to legal rules.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Read More: HSBC and other banks fined after using chat rooms to discuss gilt trades