Deutsche Bank and Citigroup have acknowledged their involvement in the trading of sensitive information on U.K. government bonds from 2009 to 2013, as part of a breach of U.K. competition law. Alongside HSBC, Morgan Stanley, and Royal Bank of Canada, the two banks were found to have illegally exchanged pricing and trading strategy information on U.K. gilts and gilt asset swaps through private Bloomberg chat rooms, according to the U.K.’s Competition and Markets Authority.
The CMA stated that these actions had detrimental effects on the banks’ clients and customers, including the U.K. Debt Management Office, pension funds, and ultimately the U.K. Treasury and taxpayers. By depriving them of the full benefits of market competition, such as lower borrowing costs, the banks undermined the proper functioning of the bond market. Michael Grenfell, Executive Director of Enforcement at the CMA, emphasized the seriousness of these alleged activities and the need for a thorough investigation.
Deutsche Bank may avoid a fine due to its cooperation with regulators, while Citigroup’s fine, if imposed, could be discounted. The other three banks have not yet admitted any wrongdoing and may face fines once the regulator issues an infringement notice. In response to the news, shares of Citigroup experienced a decline of approximately 3%, while Deutsche Bank’s stock traded around 1% lower during early trading on Wednesday. Deutsche Bank shares have declined 5% year-to-date, while Citigroup’s shares have seen a modest increase of just under 4%, outperforming the broader financial sector, which has also faced a 5% decline over the same period.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.