© Reuters. FILE PHOTO: The HSBC logo is seen at its headquarters in the Central Financial District in Hong Kong, China, August 4, 2020. REUTERS/Tyrone Siew
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By Sinead Cruise and Amy-Jo Crowley
LONDON (Reuters) – Deutsche Bank and Citigroup (NYSE:) admitted to anti-competitive activity by sharing sensitive information about UK government bonds between 2009 and 2013, UK antitrust watchdog said, tentatively finding that five banks breached competition rules.
HSBC, Morgan Stanley (NYSE:) and the Royal Bank of Canada, meanwhile, have not admitted any wrongdoing over the alleged sharing of information in one or more one-on-one conversations between a small number of traders in Bloomberg chatrooms in the aftermath of the global financial crisis.
Britain’s Competition and Markets Authority (CMA) said in a statement on Wednesday that it would consider further representations from banks before reaching a final decision on its next steps and possible issuance of financial sanctions.
The CMA said the talks allegedly related to the buying and selling of UK government bonds – specifically, gold and bullion asset swaps – and included details about pricing and other aspects of trading strategies.
“These alleged activities … are extremely serious and warrant our detailed investigation. This could have deprived taxpayers, pension savers and financial institutions of the benefits of full competition on these products, including reduced borrowing costs,” said Michael Grenfell. Executive Director of the Enforcement Department of the Capital Markets Authority.
The Capital Markets Authority said it had not yet decided whether there was sufficient evidence of a violation of competition law to take enforcement action against any of the banks. Until then, she added, none of them should be assumed to have broken the law.
After alerting the Capital Markets Authority of its interference through the leniency policy, Deutsche Bank (ETR:) will not be fined if provisional results are upheld. Citi has also settled with the Financial Market Authority and is also likely to get a discount if a fine is imposed.
A spokesperson for Morgan Stanley said it does not agree with the CMA’s interim findings and intends to contest them.
“Morgan Stanley fully cooperated with the agency during the investigation and will continue to participate in the process,” the spokesperson said.
The London-based bank told Reuters in an emailed statement that HSBC denies the allegations and will continue to make its case pending the CMA’s final decision.
RBC told Reuters it was unable to comment on an ongoing regulatory matter, but had cooperated fully with the CMA and taken any allegation of employee misconduct seriously.
In the aftermath of the financial crisis, the Bank of England boosted the economy and markets in the United Kingdom by purchasing British government debt, also known as gold bonds, through regular buyback auctions.
The CMA said those auctions prompted some alleged exchanges of information between some of the banks involved.
Financial sector workers use Bloomberg chat rooms to communicate with clients and colleagues. company that is Thomson Reuters (NYSE:), a competitor, has not been investigated.
Bloomberg did not immediately respond to a request for comment.
