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.”

RBS seeks buyers for Australian school management group Axiom Education

UK bailed-out lender Royal Bank of Scotland Group Plc (LON:RBS) has hired Rothschild to help it dispose of its Axiom Education business in Australia, according to an informed source cited by Bloomberg on Tuesday.

Axiom Education is the manager of 11 schools in the Victoria state and was established as a public-private partnership with a value of AUD255m (USD235m/EUR180m) in 2008, its website shows.

The insider told the news agency that RBS and its advisor had already dispatched initial information on the Australian unit to potential buyers.

The bank, which received GBP45.5bn (USD69bn/EUR52.4bn) aid from the UK government during the financial crisis in 2008, has been selling assets such as bank branches and its credit card processing business.

The Wall Street Journal also reported, citing an unnamed source, on RBS’ plan to dispose of Axiom Education.

RBS offloads consumer loans to financial services firm Paragon

British first mortgage and consumer finance firm Paragon Group Of Companies Plc (LON:PAG) said on Monday it had paid GBP25,000 (USD40,000/EUR31,000) to buy a portfolio of unsecured consumer loans from The Royal Bank of Scotland Plc (LON:RBS).

The transaction was conducted through Paragon’s unit Idem Capital Securities under a forward flow agreement and is seen to build on its earnings this financial year.

Paragon said it would use own cash reserves to finance the deal. The company will remain on the lookout for further buy opportunities under the forward flow accord going forward.

In October 2011, Paragon bought GBP43.2m worth of unsecured consumer loans from the UK lender and later announced several similar portfolio purchases.

Paragon, based in Solihull, engages in first mortgage and consumer finance businesses in the UK. The company offers buy-to-let and owner-occupied mortgage assets, asset investment and administration, vehicle fleet management, unsecured lending, property services, mortgage brokering, loan and vehicle finance and surveyors and property consulting.

Last month, the company bought a domestic consumer credit card receivables portfolio from MBNA Europe Bank Limited for up to GBP16.9m. The deal was preceded by a GBP55.7m acquisition of closed UK consumer credit card receivables from the bank in December.