Five banks under CMA investigation over competition laws

Five major banks are being investigated by the Competition and Markets Authority (CMA) for sharing competitively sensitive information in one-to-one conversations. 

Citi Bank, Deutsche Bank, HSBC, Morgan Stanley, and Royal Bank of Canada are alleged to have participated in the market-infringing conduct between 2009 and 2013. 

The CMA states that in that time, private talks took place in Bloomberg chat rooms between a number of traders that at the time were employees of the five banks, to share insights and information ‘related to the buying and selling of UK government bonds’.

According to the watchdog, by not fully competing with each other, the banks involved could have harmed those who they’ve traded with, such as pension funds, the UK Debt Management Office, and on top of all – the HM Treasury and the UK taxpayer. 

In the case of Deutsche Bank, the financial institution alerted the CMA for its wrongdoings under the CMA leniency policy, while Citi applied for leniency as the investigation into it was ongoing. As a result, Deutsche Bank may avoid being penalised and any fines imposed on Citi could be reduced if both banks continue to cooperate. 

Michael Grenfell, Executive Director of Enforcement at the CMA, commented: “Our provisional decision has found that, in the aftermath of the global financial crisis, five global banks broke competition law by taking part in a series of one-to-one online exchanges of competitively sensitive information on pricing and other aspects of their trading strategies on UK bonds. 

“This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs.

“A properly functioning, competitive bond market benefits tens of millions of taxpayers and pension savers, as well as being at the heart of the UK’s reputation as a global financial hub. These alleged activities are therefore very serious and warrant the detailed investigation we have undertaken. 

“While both Deutsche Bank and Citi have admitted their involvement in anti-competitive conduct, we will now consider further representations from the parties before reaching a final decision.”

While Deutsche Bank and Citi have admitted to participating in the alleged behaviour, HSBC, Morgan Stanley, and Royal Bank of Canada have claimed no involvement. The CMA has concluded that no assumptions regarding the situation should be made at this stage.