UK regulator fines four banks £100m over traders’ sharing of information | Banking

The UK competition regulator has fined four major banks, including HSBC and Citi, more than £100m after it found traders had been using Bloomberg chatrooms to share sensitive information about government bonds.

The penalties follow a long-running investigation by the Competition and Markets Authority (CMA) that discovered that individual traders at Citi, HSBC, Morgan Stanley, Royal Bank of Canada (RBC) and Deutsche Bank had messaged rival bankers about the buying and selling of UK government bonds – known as gilts – on specific dates between 2009 and 2013.

The CMA said the banks had put in place “extensive compliance measures” to avoid similar behaviour by its staff, but it announced a series of fines on Friday. RBC received the largest fine (£34.2m), followed by Morgan Stanley (£29.7m), HSBC (£23.4m) and Citi (£17.2m).

Deutsche Bank was exempt from fines after alerting the CMA to wrongdoing. Citi’s penalty was reduced by more than 50% after it agreed to a settlement during the investigation.

The banks have until 22 April to pay.

“The financial services sector is an integral part of the UK economy, contributing billions every year, and it’s essential that it functions effectively,” said Juliette Enser, the CMA’s interim executive director of competition enforcement. “Only through healthy and competitive markets can we ensure businesses and investors have confidence to invest and grow for the benefit of all in the UK.

“The fines imposed today reflect the CMA’s commitment to dealing with competition law breaches and deterring anti-competitive conduct. The fines would have been substantially higher had the banks not already taken unusually extensive steps to make sure that this doesn’t happen again.”

HSBC said in a statement that it was “pleased to put this investigation behind us. The CMA’s concerns were about a small number of historic communications between HSBC and Deutsche Bank, dating back 15 years to 2009-10. Since that period we have transformed our controls and the CMA itself has acknowledged we now have a robust compliance programme”.

A spokesperson at Morgan Stanley said it had made a commercial decision to settle the case, which related to “the actions of a single former employee approximately 15 years ago. The CMA has made no findings regarding impact on the market or of financial benefit to the firm. Since the time in question the whole industry, including Morgan Stanley, has undergone significant changes, including enhanced supervision and compliance controls.”

Deutsche Bank said it had “proactively reported the issue to the UK authority and cooperated fully in the subsequent investigation which related to activity prior to 2014”.

A spokesperson for Citi said the bank was pleased to resolve the longstanding case, according to Reuters.

RBC said: “The conduct in question was historic and our compliance environment has significantly enhanced over the last decade since it occurred … We do not tolerate misconduct of any kind and are committed to treating employee misconduct very seriously and meeting all regulatory requirements. The two employees who engaged in the conduct in question are no longer with the bank.”