The European Commission (EC) has imposed a fine of €26.6m upon Dutch banking group Rabobank, accusing it of taking part in a cartel related to the trading of certain euro-denominated bonds, alongside Deutsche Bank.
However, Deutsche Bank was not penalised as it disclosed the cartel to the Commission under the leniency programme.
The EC, through its investigation, found that the cartel operated between 2006 and 2016.
The carter focused on euro-denominated Supra-Sovereign, Foreign Sovereign, Sub-Sovereign/Agency bonds (SSA bonds) as well as government guaranteed bonds traded in the European Economic Area (EEA).
During its inquiry, the Commission discovered that Rabobank and Deutsche Bank, facilitated by certain traders, shared commercially sensitive information and collaborated on their trading and pricing strategies.
The regulatory body started its investigation in May 2017 following the submission of an immunity application by Deutsche Bank under the Commission’s 2006 Leniency Notice.
Last December, the Commission issued a statement of objections to both banks, outlining its concerns regarding competition.
According to the EC, the traders operated at the EUR SSA desk of Deutsche Bank in Frankfurt and at the Investment Grade Bonds desk of Rabobank in London.
The traders utilised Bloomberg emails, instant messages, and online chatrooms to share information related to prices, volumes, current and future trading strategies and positions, counterparties’ identities, as well as their buying or selling requirements for bonds.
European Commissioner, in charge of competition policy, Didier Reynders said: “Trustworthy and well-functioning bonds trading markets are crucial not only for the national authorities issuing bonds but also for the investors buying and trading them.
“Today we fine Rabobank for colluding with Deutsche Bank to distort competition when trading certain Euro-denominated bonds. We will remain vigilant and committed to preserve effective competition in financial markets.”
In response to the fine, Rabobank has expressed disappointment with the outcome, stating that it cooperated fully with the Commission’s investigation. The bank will now evaluate the possibility of filing an appeal.
The Dutch bank stated: “Rabobank seeks to maintain a strong culture of compliance across its business and employees worldwide, including in relation to competition law, and considers its obligations in this regard to be of the utmost importance.”
