The EU has excluded the 10 most damaging banks in the bond market from favorable bond sales as part of a € 800 billion recovery fund because of historical violations of antitrust law.
Brussels’ The biggest debt ever On Tuesday, the sale of new 10-year bonds will begin to fund the Next Generation EU program under so-called syndication. In this syndication, a group of banks are paid to increase demand from investors.
However, 10 companies, including major companies such as JP Morgan, Citigroup, Bank of America and Barclays, are said to be unable to participate in these transactions because they were previously involved in a fraudulent market scandal.
A European Commission spokesman who handles debt issuance on behalf of the EU said banks found to have violated EU competition rules were “not invited to bid for individual syndicated transactions.” “The European Commission is taking a rigorous approach to ensuring that the entities with which it works are suitable to become EU counterparties.”
A spokesman added that banks convicted of antitrust violations need to show that they have taken “corrective action” to prevent a recurrence before bidding on syndicates is allowed.
Bank of America, Natixis, Nomura, NatWest and UniCredit were blocked by the Commission’s antitrust law. Last month’s ruling They participated in a fixed income cartel during the eurozone debt crisis 10 years ago.
Citigroup, JP Morgan and Barclays were banned, in addition to NatWest, as they were found to have been involved two years ago. Manipulating the currency market Between 2007 and 2013, people familiar with the matter said. Deutsche Bank and Crédit Agricole were also excluded by the April ruling. Another bond trading cartel, People said. All banks declined to comment.
According to Dealogic statistics, this list includes seven of the top ten European government and supranational debt volumes sold so far this year.
The 10 banks excluded from the syndicate are on the list of 39 so-called “primary dealers”. This is the bank responsible for bidding on bonds in the EU’s regular debt auctions starting in September. However, this liability can be costly, so investment banks typically consider the fees earned from syndication to be a sweetener to gain the status of a primary dealer.
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“There is a delicate balance between the issuer and the primary dealer, which risks confusing it,” said one senior banker of the lender, who was banned from syndicated transactions. “These issues they have raised are long gone and have been resolved.”
Banks working on Tuesday’s first recovery fund bonds are BNP Paribas, DZ Bank, HSBC, Inteza San Paolo, Morgan Stanley, Danske Bank and Santander. According to one bank, investors have placed more than € 140 billion in debt for € 20 billion.
The Recovery Fund, agreed by EU member states last year, is set to turn Brussels into one of the largest borrowers in the region.
EU freezes 10 banks out of bond sales over antitrust breaches Source link EU freezes 10 banks out of bond sales over antitrust breaches