UBS, Nomura fined US$452m for financial crisis bond cartel

[BRUSSELS] UBS Group and Nomura Holdings and UniCredit were fined a total of US$452 million by the European Union for colluding on euro government bond trading during the region's sovereign debt crisis.

UBS was fined 172 million euros (S$279.6 million) and Nomura will have to pay 129.6 million euros for a traders' cartel that swapped commercially sensitive information from 2007 to 2011 when eurozone bond yields soared. UniCredit was fined 69 million euros.

It was "unacceptable, that in the middle of the financial crisis, when many financial institutions had to be rescued by public funding these investment banks colluded in this market at the expense of EU member states," Margrethe Vestager, the EU's antitrust chief, said in an emailed statement.

The EU has spent more than a decade probing how bank traders swapped information in chatrooms, leading to billions of euros in fines. At the same time it approved billions of euros in government support to keep many European lenders alive during the financial crisis.

Ms Vestager's criticism seems to be aimed at two banks that weren't fined. A Royal Bank of Scotland Group unit escaped a fine because it was the first to tell regulators. It received a UK bailout in 2008. Portigon, the successor bank to bailed-out and failed German lender WestLB, avoided a levy because it had no revenue last year.

Bank of America and Natixis participated in the cartel but weren't fined because they had quit the cartel five years before the EU started its probe. While the euro-bond fines are far lower than previous EU cartels, they do allow the banks' customers sue for damages if they can prove higher costs were passed on to them.

UBS said the fine could hurt second-quarter results by as much as US$100 million. It's considering an appeal and has "taken appropriate action years ago to mitigate and improve processes," it said in a statement.

UniCredit "vigorously contests" the fine and will appeal to the EU courts, it said in a statement. The bank "maintains that the findings do not demonstrate any wrongdoing." Nomura didn't immediately respond to a request for comment.

Citigroup, RBS and JPMorgan were among five banks that agreed in 2019 to pay EU fines of over 1 billion euros for colluding on foreign-exchange trading strategies. The EU is still investigating some banks for a related cartel.

Bank of America, Credit Suisse and Credit Agricole were fined about 28.5 million euros last month over chatrooms where traders swapped information on trading of US supra-sovereign, sovereign and agency bonds.

BLOOMBERG