EC issues fines totalling EUR1.7bn to eight banks for rigging financial benchmarks

Banks involved in a financial cartel that colluded to fix crucial benchmark rates have been levied with fines that total EUR1.7bn by the European Commission, it was reported on Wednesday.

These benchmarks included the London interbank offered rate, or Libor, the Tokyo interbank offered rate and the euro area equivalents. The benchmark rates are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.

The rate rigging was described by European Commission vice-president Joaquin Almunia as “appalling examples of misconduct”.

UK bank Royal Bank of Scotland (RBS) is among the banks that had the record breaking fines imposed for fixing yen Libor and Euribor rates. Other organisations involved were Deutsche Bank, which received the biggest fine of EUR725.36m, Societe Generale and broking firm RP Martin, which is said to have facilitated one of the infringements by using its contacts with banks involved in settling Libor. Two US banks, JP Morgan and Citibank, were also involved in the cartel.

Barclays bank escaped being fined EUR690m, as it had voluntarily reported that the cartel was rigging Euribor rates. Swiss bank UBS also avoided a fine of EUR2.5bn for exposing the cartel in yen Libor fixing.

The European Commission said it will continue investigating Credit Agricole, HSBC, JPMorgan and brokerage ICAP for similar offences. Credit Agricole has reportedly refused to settle and is likely to face sanctions in 2014, while HSBC has also contested the penalty proposed by the European Commission.

Financial regulators in the UK and US have already levied fines on financial institutions including UBS, RBS, Barclays, Rabobank and ICAP for attempts to manipulate key interest rates. Also, certain individuals are facing criminal charges.

Sir Philip Hampton, the chairman of RBS, was cited as saying: “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.”

Flybe’s expansion plans negatively impacted by EC’s expected decision to block Ryanair-Aer Lingus deal

UK regional airline company Flybe Group Plc (LON:FLYB) said it is disappointed by the news that the European Commission (EC) will most certainly block Irish low-cost carrier Ryanair Holdings Plc’s (LON:RYA) planned buyout of Aer Lingus Group Plc (LON:AERL).

EC’s expected decision would not only prevent Ryanair from securing the 70% it does not already own in its smaller rival, but also hinder Flybe’s deal to acquire 43 Aer Lingus UK and European routes plus some aircraft for EUR1m (USD1.3m).

This latest agreement is part of Ryanair’s “unprecedented” remedies package in connection with the Aer Lingus bid. The company had also agreed to sell all of its and Aer Lingus’ London-Gatwick operations to International Airlines Group (LON:IAG).

Yesterday, Ryanair announced it was notified by the EC of its intention to ban the buyout despite the offered concessions. The company also noted it would appeal any prohibition decision to the European Courts. In its own statement, Flybe said it would wait to see the outcome of that process.

Ryanair is offering a price of EUR1.30 (USD1.75) per share to buy the remaining shares in Aer Lingus, thus valuing the company at EUR694m.

EC refers Shell’s sale of Shell Aviation Espana to Disa to local competition regulator

The European Commission (EC) said on Friday it had sent to the Spanish competition regulator for review the planned deal by Royal Dutch Shell plc (LON:RDSA) to sell a stake in its Spanish aviation fuels unit Shell Aviation Espana SL (SAE) to domestic Disa Corporacion PetrolĂ­fera SA.

Spain’s Comision Nacional de la Competencia (CNC) requested on 22 May 2012 that the EC allowed it to assess the deal which it sees to create competition problems in the country.

Following a preliminary review by the EC, the European Union regulator said that CNC is best placed to investigate the transaction as it would only affect sectors of the Spanish market.

The CNC expressed concerns that a combination of Disa and SAE could impact sectors connected to into-plane services provision, including logistic services and petroleum products storage, in the Canary Islands.

The proposed deal could result in existing and future competitors losing access to Disa’s storage facilities and logistic services and could also lead to coordinated effects in the fuel sectors in the Canary Islands, the CNC said.

Under the planned transaction, Shell is selling a controlling stake in its Spanish aviation fuel subsidiary SAE to Disa.

Currently Shell owns 100% of SAE, which offers into-plane services at Spanish airports Las Palmas, Fuerteventura, Lanzarote, Tenerife North and Tenerife South.

Disa is an oil company with operations including sale, storage and transport logistic services of petroleum products in the Canary Islands.