EU accuses Rabobank, Deutsche Bank of price fixing

Rabobank and the Deutsche Bank have violated European competition rules with secret agreements on the trade in government bonds, the European Commission believes. If further investigation confirms this suspicion, the two banks face hefty fines.

Between 2005 and 2016, the Dutch and German banks exchanged market-sensitive information about government bonds and coordinated their prices and trading strategies, the Commission believes. Traders of both banks allegedly maintained contact about this via emails and chat rooms.

The banks initially asked the Commission for a settlement, but because they couldn’t reach an agreement, the executive board of the European Union is now continuing the criminal proceedings. If it proves that Rabobank and Deutsche Bank have violated the rules, the Commission can impose fines of up to 10 percent of their global annual turnover. That would run into the billions of euros for both banks. Rabobank recorded a yearly turnover of more than 12 billion euros last year.

“For effective competition to function, it is fundamental that economic operators determine their prices independently. Citizens need to be able to trust that financial institutions do not implement practices that restrict competition in bonds trading markets,” said responsible European Commissioner Margrethe Vestager. “It is now up to Deutsche Bank and Rabobank to respond to our concerns.”

Rabobank pointed out that the investigation is still ongoing and said that it is cooperating. The bank declined to comment until the investigation was completed. Rabobank will then examine the evidence and respond.

Supervisors previously caught Rabobank manipulating international interest rates. This Libor case ended in a settlement that cost Rabobank 774 million euros.

Deutsche Bank, Germany’s largest bank, has been embroiled in a series of scandals in the past, including Libor, tax evasion, money laundering, and the sale of junk mortgages. The bank has already paid billions of euros in fines.

Last year, the European Commission fined several other banks, including the Swiss bank UBS, for manipulating bond trading.