Banks fined over competition breach

The Competition and Markets Authority (CMA) has reached settlements with Citi, HSBC, Morgan Stanley and Royal Bank of Canada over past exchanges of sensitive information regarding UK government bonds, known as gilts. The banks will pay fines totalling over £100 million. Deutsche Bank has been granted immunity from financial penalties as it was the first to report its conduct, which took place between 2009 and 2013.

Individual traders at these banks engaged in private one-to-one Bloomberg chatrooms where they shared competitively sensitive information about buying and selling gilts on specific dates. Gilts play a crucial role in financing UK public spending, as investors lend money to the government in return for stable interest payments.

Healthy competition is essential for investment, innovation and economic growth. Competitors must independently determine their pricing and strategies to ensure an effective market. Following a CMA investigation, the banks acknowledged instances where traders shared sensitive information about UK bond pricing. These exchanges occurred between traders on a one-to-one basis and involved the pricing of gilts and gilt asset swaps.

This misconduct took place over several years, with HSBC ceasing exchanges in 2010, Morgan Stanley in 2012, and Citi, Deutsche Bank and Royal Bank of Canada in 2013. Since then, the banks have introduced extensive compliance measures to prevent such conduct from occurring again.

Juliette Enser, Executive Director of Competition Enforcement at the CMA, said following constructive engagement between the banks and the CMA, we are pleased that we have been able to settle these 5 cases involving the past sharing of competitively sensitive information about pricing. 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.

The CMA has imposed fines to deter anti-competitive behaviour. However, the penalties are lower than they could have been due to the banks' extensive compliance efforts. Each of the unlawful exchanges occurred in separate bilateral Bloomberg chatrooms between traders from two banks. These conversations involved information relevant to UK government bond pricing, including gilt auctions, secondary market trading and Bank of England buybacks.

Four banks have now settled and agreed to pay a total of £104,460,000 in fines. Deutsche Bank is exempt due to its voluntary disclosure under the CMA's leniency policy. Citi also received a reduced fine for applying for leniency during the investigation. The fines for each bank are as follows:

• Citi: £17,160,000, including a 35% leniency discount and a 20% reduction for early settlement
• HSBC: £23,400,000, including a 10% reduction for settling after the CMA's Statement of Objections
• Morgan Stanley: £29,700,000, including a 10% reduction for settling after the CMA's Statement of Objections
• Royal Bank of Canada: £34,200,000, including a 10% reduction for settling after the CMA's Statement of Objections

The penalties consider the time elapsed since the infringements ended and the banks' subsequent compliance measures, some of which were implemented before the CMA's investigation began. The banks have until 22 April 2025 to pay their fines, concluding the investigation.

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