Should I try to link the image with the topic of the press release?
- It's all about the Commission, not about RBS?
- As the inclined Commission building shows, the Commission's path is not always straightforward?
- By paying its fine, RBS participates in the European project?
“We acknowledged back in February that there were serious shortcomings in our systems and controls on this issue, but also in the integrity of a very small number of our employees. Today is another sobering reminder of those past failings and nobody should be in any doubt about how seriously we have taken this issue. The RBS board and new management team condemn the behaviour of the individuals who were involved in these activities. There is no place for it at RBS."
- The Euro interest rate derivatives cartel includes Barclays, Deutsche Bank, RBS, and Société Générale. Crédit Agricole, HSBC, and JP Morgan have not yet settled with the European Commission.
- The Yen interest rate derivatives cartel consists of UBS, RBS, Deutsche Bank, Citigroup, JP Morgan, and RP Martin.
- The basic amount of the fines depends on the value of sales generated by the cartel in its last year of operation. The value of sales is multiplied with a gravity factor (between 0 and 30 %, depending on elements such as the nature of the infringement, the combined market share of all cartel participants, the geographic scope of the infringement, and the degree of its implementation) and the number of years the cartel operates. To this amount, the Commission adds additional 15 – 25 % (prevention factor) of the value of sales, independent of the gravity factor and the time of operation of the cartel.
- The Commission then adjusts the base amount upward or downward. Aggravating factors are continuing or repeating infringements, refusal to cooperate, and the role as leader or instigator of the cartel. Mitigating factors are, above all, a proven termination of the cartel, a simply negligent participation in the cartel, and an effective cooperation with the European Commission to discover and investigate the cartel. Under the Leniency rules, the degree of any downward adjustment also depends on each participant's timing of cooperation with the Commission: The first collaborator can be either totally exempt or benefit from a 30-50 % reduction, the second collaborator can hope for a 20-30 % reduction, and any subsequent collaborator can obtain a maximum 20 % reduction.
- Finally, for each participant, the fine is capped at 10 % of its total turnover.
The European Commission has not published the exact gravity and prevention factors. Therefore, we cannot calculate the exact volume of sales generated by the cartels. Depending on the factors you choose, the Euro Interest Rate Derivatives Cartel has generated sales between 2 bn € and 6.9 bn €.
A final word on the scope of the Commission's investigations and fines: They separate from any other actions taken by financial regulators. The Commission protects competition and ensures the functioning of markets whereas regulators tackle possible manipulation of financial benchmarks. The EURIBOR / LIBOR story may not yet be finished for our banks...