EU competition watchdog warns four banks over bond trading cartel

The European Commission has warned four banks they may have breached EU competition rules, as the watchdog investigates an alleged bond trading cartel.

Employees at the banks allegedly colluded in online chatrooms to distort competition in US dollar denominated bonds in the secondary market over a six year period.

The investigation relates to conduct by individual traders at the four unnamed banks, and does not imply that anti-competitive behaviour was general practice. The allegations have not yet been proven.

In a statement the commission said: “The Commission has concerns that at different periods between 2009 and 2015, the four banks exchanged commercially sensitive information and coordinated on prices concerning US dollar denominated supra-sovereign, sovereign and agency bonds, known as “SSA bonds”.

“These contacts would have taken place mainly through online chatrooms.”

After receiving the warning the banks are entitled to examine investigation documents, reply in writing and request an oral hearing to present their response to the case.

Following this the commission will decide whether to impose a fine of up to ten per cent of the company’s annual worldwide turnover.

The commission did not name the banks involved in the investigation, however both Deutsche Bank and Credit Suisse have released statements to say they are cooperating with the probe.

Deutsche Bank said it had “proactively cooperated with the European Commission in this matter and as a result has been granted immunity". The bank does not expect a financial penalty, it said. 

A spokesperson for Credit Suisse said the bank “is continuing to co-operate with the European Commission’s investigation of past conduct by SSA bond traders at a number of banks.

“We do not believe any Credit Suisse employees engaged in anti-competitive conduct, and we hope to dispel the concerns raised by the European Commission,” the spokesperson said.

“Regardless of the merits of the European Commission’s concerns, from a Credit Suisse perspective they relate only to trading by a single former employee who left the bank in early 2016.”