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8 Banks Charged by EU Over Government Bond Cartel Allegations

Euro notes - Photo Pexels

Eight unnamed banks have been charged by the EU over allegations of being involved in trading Eurozone government bonds in coalition with a cartel.

The unnamed banks are said to have done this between 2007 and 2012 when the financial crisis was responsible for woes in banks across various countries. The allegations made by the European Commission indicate that the said banks colluded with cartels by revealing to them sensitive information. The apparent cooperation between traders linked to the banks and the cartels was facilitated by communication does via online chat rooms.

Antitrust Authority Involved In Earlier Charges

This is not the first time that the antitrust authority of the EU has targeted financial institutions. In fact, several banks in Europe have previously been fined by the authority over various issues. The image of the financial institutions in the region has thus gone down as a result of the various recent links to anti-competitive issues. In a bid to repair the damage caused on the image of the financial industry as a whole, the European Commission has recently come out to clarify that the anti-competitive nature of some banks was not a reflection of the wider Eurozone government bond sector.

Before the current cases, reports hit the media about the alleged involvement of four banks including Deutsche Bank, Credit Suisse, Credit Agricole and a fourth unnamed bank in bond cartel issues. The charges on these banks followed the same plot where traders were linked to cartels operating outside the banks. In a similar fashion, the traders and cartels communicated using online chat rooms. The case is still ongoing and if the banks are found to be guilty, the fines charged on the banks might account to nearly 10 percent of their total global turnover.

Hefty Fines For Guilty Parties

Banks are critical in the financial trading world. They not only act as facilitators in the market but they also enable the trading of CFD, bonds, and various other financial items. If the current allegations by the EU authority amount to the breach of antitrust rules, the banks will find themselves in a situation that big companies like Google have been before. Google was slapped with a $5 billion penalty in 2018 for abusing its competition. In the financial sector, a total of 1.5-billion-euro penalty was imposed on banks who were found guilty of being involved with cartels in 2013.

The European Commission said that the motive behind the collusion of bank traders with various cartels was aimed at influencing the market by distorting competition. Issues of competition between various companies across the industry are viewed very seriously by the different EU bodies and authorities. While there have been many different kinds of malpractices done to affect competition in the past, the recent actions by the EU commission have revealed how strongly the authority is willing to discourage unfair practices in the market. The case that is leveled against the banks will thus be monitored keenly by various stakeholders in the financial market.

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