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Rabobank hit with €26.6 million fine for bond price-fixing cartel

EditorAmbhini Aishwarya
Published 24-11-2023, 05:00 pm
© Reuters.

The European Commission has imposed a €26.6 million fine on Rabobank for its role in a cartel that manipulated the prices of euro-denominated bonds, a scheme that spanned over a decade starting from 2005. Despite the severity of the infringement, Deutsche Bank (ETR:DBKGn) avoided a potential €156 million (EUR1 = USD1.0913) penalty by disclosing the cartel's operations to authorities.

During the period between 2006 and 2016 within the European Economic Area (EEA)'s Euro Sovereign, Supranational, and Agency (SSA) bond markets, Rabobank and Deutsche Bank were found to have coordinated their trading strategies via Bloomberg channels, distorting competitive pricing and undermining market integrity. The collusion involved exchanging market-sensitive information on secondary markets, which directly impacted the bond prices.

The fine levied on Wednesday reflects Rabobank's financial gain from the illegal activities, their extensive involvement in the price-fixing strategies, and their cooperation during the investigation. Rabobank had anticipated this outcome and had already set aside funds for potential fines in their 2022 financial statements.

European Commissioner Didier Reynders underscored the importance of trustworthy financial markets while announcing the sanctions against Rabobank. The case adds to a series of punitive actions by the Commission aimed at curbing anti-competitive practices within bond markets. In May 2021, eleven banks were fined for similar violations, although some avoided penalties due to statute limitations on past offenses.

Oliver Blower, CEO of VoxSmart, pointed out that this incident highlights the need for more advanced surveillance systems to detect deceptive practices within financial communications that are often laden with complex jargon.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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