Major Banks Fined: Citi, HSBC, Morgan Stanley, and RBC Penalized for UK Bond Pricing Disclosure Violations

The Competition and Markets Authority (CMA) has taken significant action against major banking institutions for breaching competition regulations in May 2023. The focus of this action involves four leading banks and Deutsche Bank, which engaged in illicit exchanges regarding the pricing of UK government bonds, specifically gilts and gilt asset swaps, through private Bloomberg chatrooms.

Details of the CMA Charges Against Major Banks

These exchanges among individual traders raised serious concerns about market integrity. As a result, the CMA has imposed fines on the banks involved, although some institutions received leniency for their cooperation.

Immunity and Settlements

Deutsche Bank has been granted immunity from penalties due to its proactive disclosure of the anti-competitive behavior under the CMA’s leniency policy. Similarly, Citi acknowledged its involvement and benefitted from a reduced fine.

A spokesperson from Citi expressed satisfaction with the resolution, stating: “We are pleased to resolve this longstanding matter with the CMA from over a decade ago. We cooperated fully with the CMA and remain committed to ensuring full regulatory compliance.”

In a similar vein, a statement from Deutsche Bank emphasized their proactive approach, noting that they “reported the issue to the UK authority and cooperated fully in the subsequent investigation.”

Breakdown of Fines Imposed by the CMA

The following is a summary of the fines levied against the banks, which reflect leniency and settlement agreements:

• Citi: £17.16 million
• HSBC: £23.4 million
• Morgan Stanley: £29.7 million
• RBC: £34.2 million

Impact on the UK Financial Services Sector

Juliette Enser, executive director of competition enforcement at the CMA, commented on the outcomes of these investigations: “Following constructive engagement between the banks and the CMA, we are pleased that we have been able to settle these five cases involving the past sharing of competitively sensitive information about pricing.”

She further emphasized the importance of a competitive financial services sector: “The financial services sector is an integral part of the UK economy, contributing billions every year, and it’s essential that it functions effectively. Only through healthy and competitive markets can we ensure businesses and investors have confidence to invest and grow – for the benefit of all in the UK.”

For more information on the CMA’s regulatory efforts, visit the official CMA website.