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Whistleblower RBS escapes $140 million in new EC fines for Libor cartel

Royal Bank of Scotland received immunity from a €110 million ($146 million) fine after telling the European Commission’s competition watchdog it had tried to fix Swiss franc interest rates with JP Morgan.

The EC fined JP Morgan €61.7 million ($78 million) Tuesday for rigging the Swiss franc Libor rate. The bank’s fine was reduced 40% for cooperation during the investigation.

The EC’s October 21 release is here.

In January this year, U.S. authorities fined RBS and a subsidiary a combined $325 million after the bank admitted rigging Libor rates and false reporting.

At the same time, the UK’s Financial Services Authority (FSA) imposed a fine of £87.5 million ($140 million) against the RBS entities.

Tuesday’s action was the third time Europe’s competition authorities fined banks and brokers for forming cartels to fix benchmark interest rates.

Collusion between competitors is prohibited by Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the Agreement on the European Economic Area.

In December 2013, the EC fined eight banks including RBS a combined €1.7 billion ($2.16 billion) for colluding to fix Euribor and yen Libor rates. The other banks were Barclays, Deutsche Bank, Société Générale, UBS, JPMorgan, Citigroup, and RP Martin.

Joaquín Almunia, the chief of EC competition enforcement, said then: “What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other.”

On Monday, William Dudley, head of the New York Federal Reserve, warned the big banks to manage compliance better or face the “inevitable conclusion  . . . that your firms are too big and complex to manage effectively” and should be made smaller.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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