Commission turns up pressure with expanded Libor probe

Banks and broker-dealers ensnared in the Libor-rigging scandal are facing fresh pressure to settle with Europe’s top competition…

Banks and broker-dealers ensnared in the Libor-rigging scandal are facing fresh pressure to settle with Europe’s top competition authority as it expands the scope of its probes.

The European Commission’s 18-month antitrust investigation, previously known to include yen and euro denominated swaps, has been extended to include Swiss franc-linked instruments and poses a big regulatory threat to the financial institutions under scrutiny, according to sources.

The commission can impose a maximum penalty equivalent to 10 per cent of a firm’s global turnover for each cartel it is found to be involved with. A bank implicated in all three investigations could, for example, face fines of up to 30 per cent of total revenues.

In a speech today in Paris, the EU’s competition commissioner will stress his determination to pursue the cases and ensure competition enforcement complements actions of global authorities against misconduct and corruption.

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Joaquín Almunia’s speech will be interpreted as a warning to financial institutions that are holding out against antitrust authorities.

The commission has not named any banks or interdealer brokers implicated in its current investigations.

– (Copyright The Financial Times Limited)