European Commission fines Rabobank €26.6mn over bond trading cartel

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The European Commission has fined Dutch lender Rabobank €26.6mn for its part in a bond trading cartel, but Germany’s Deutsche Bank has avoided a much larger fine after revealing its role in the collusion.

Traders at Deutsche and Rabobank were found to have used emails and online chat rooms from 2006 to 2016 to exchange commercially sensitive information on counterparties’ identities and their desire to buy or sell euro-denominated sovereign, quasi-sovereign and government agency bonds.

“Traders adjusted their price levels and trading strategies based on these exchanges,” the commission said on Wednesday. The employees involved operated at Deutsche’s European SSA desk in Frankfurt and at Rabobank’s investment grade bonds desk in London.

Deutsche avoided a fine of almost €156mn after tipping off the commission about the cartel through the EU body’s so-called leniency programme.

Rabobank said it was “disappointed” by the outcome, having “co-operated” with the commission’s investigation, and that it was considering lodging an appeal.

The commission said its investigation began in May 2017. In December last year it informed both banks of its preliminary view that the lenders had breached EU antitrust rules when trading euro SSA bonds.

“Today we fine Rabobank for colluding with Deutsche Bank to distort competition when trading certain euro-denominated bonds,” said Didier Reynders, the EU’s competition chief.

“Trustworthy and well-functioning bonds trading markets are crucial not only for the national authorities issuing bonds but also for the investors buying and trading them,” he said.

The commission said traders at the two banks came together to set the prices at which bonds were offered and displayed on Bloomberg terminals.

However, one industry insider said tacit co-ordination was not uncommon, with bond dealers frequently arriving at their own price after checking other dealers’ quotes.

Rabobank is not the first lender to be fined by regulators for misdeeds in European bond markets.

Morgan Stanley in 2019 received a €20mn fine from France’s market regulator for allegedly manipulating the price of government bonds in 2015.

In 2021, UBS, UniCredit and Nomura were fined a total of €371mn for taking part in a bond trading cartel during the European sovereign debt crisis, with traders at the three banks having been found to have shared sensitive information in chat rooms on Bloomberg terminals.

NatWest, Natixis, Bank of America and German lender Portigon were also accused of breaching antitrust rules between 2007 and 2011, but were not fined by EU regulators.