EU fines banks record $2.3 billion over interest rate-fixing scandal

EU competition regulators on Wednesday fined a group of American and European banks a record 1.7 billion euros ($2.3 billion) after they admitted to participating in cartels to manipulate two benchmark interest rates.

Eight banks, including Deutsche Bank, Royal Bank of Scotland and JPMorgan, were accused of fixing the yen-focused London interbank offered rate (Libor) and the euro interbank offered rate (Euribor), which are used to set the price of trillions of dollars worth of products such as mortgages and student loans.

Two of the banks, Barclays and UBS, avoided paying a financial penalty after they alerted authorities to the violations.

The fines, the highest ever levied by European antitrust authorities, were the result of a two-year investigation. 

EU Competition Commissioner Joaquin Almunia said the collusion between the banks was “shocking” and he vowed to go after other cartels in the financial sector.

"This will not be the end of the story, neither for interest rate derivatives nor for the manipulation of benchmarks," Almunia told reporters in Brussels.

"And one of the areas where, as you know, we have received some elements of information that we are looking at very, very carefully is forex, forex markets and the relations with forex benchmarks."

The latest fines come after UBS, RBS, Barclays, Rabobank and ICAP agreed to pay more than $3 billion to regulators in the US, UK and Switzerland upon admitting their involvement in a global rate-fixing scandal.