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HSBC's gamble pays off as US$37m Euribor fine scrapped

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HSBC Holdings Plc won its fight against a 33.6 million-euro (S$50.8 million) European Union antitrust fine for rigging a key benchmark in a decision that may give hope to other banks that are challenging penalties in the massive case.

[GENEVA] HSBC Holdings Plc won its fight against a 33.6 million-euro (S$50.8 million) European Union antitrust fine for rigging a key benchmark in a decision that may give hope to other banks that are challenging penalties in the massive case.

While the judges at the EU's General Court agreed that HSBC broke competition rules, they said regulators provided "insufficient reasoning" for the amount of the fine. JPMorgan Chase & Co and Credit Agricole SA's are fighting even larger fines in the case.

The decision Tuesday in Luxembourg represents a victory for HSBC after it bet that fighting the fine and risking an even larger sanction would pay off, rather than joining a 824.6 million-euro settlement that four other banks including Deutsche Bank AG and Societe Generale SA reached with the EU.

HSBC's penalty was the smallest of the trio of lenders that refused to settle and were fined a total of 485.5 million euros by the EU in 2016. The banks were penalised for breaking antitrust rules by colluding to manipulate the Euribor rate, which banks in Europe use for setting trillions of euros in lending for mortgages and other loans.

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The ruling is the latest in a series of court defeats for Margrethe Vestager, who's about to start her second five-year term as EU antitrust chief. The same court this morning toppled a decision to order coffee giant Starbucks Corp to repay millions of euros of taxes to the Netherlands. EU courts earlier this year overturned an order for Belgium to reclaim about 800 million euros from 35 companies, including Anheuser-Busch InBev NV.

While HSBC said it was pleased with the ruling, it didn't close the door on a possible appeal of the portion of the ruling applying to antitrust rules.

"We have consistently disputed that our actions constituted anti-competitive behavior and are considering all aspects of the ruling and our legal options," a spokesman for HSBC said in an email.

The European Commission said it will "carefully analyse the judgment." It could appeal the verdict to the European Court of Justice, the bloc's highest tribunal. The Commission could also readopt its original decision to punish the banks and issue fresh fines - which it has done before.

After nearly 800 million euros worth of fines it slapped on 11 airlines for price-fixing in 2010 were overturned five years later, the Commission turned around and issued 776 million euros in fresh fines in 2017.

The case has struck a nerve with the three holdouts. The Luxembourg-based General Court in March took the unusual step of closing the HSBC hearing to the public. JPMorgan and Credit Agricole also tried to block the Commission from publishing the non-confidential version of the 2016 decision.

Such tactics could have allowed the companies to stall potential damage claims until the final result of their appeals. That's because decision documents lay out how and when the companies breached antitrust rules, which is crucial evidence for assessing any compensation claim.

BLOOMBERG