Eight banks before forbidden to participate bond sales for the EU’s € 800 billion stimulus fund were allowed to handle future deals after pledging ‘integrity’ and providing evidence of ‘corrective action’ following violations history of antitrust rules.
The EU launched its biggest borrowing spree earlier this week with a € 20 billion bond sale, but 10 banks have been barred from working on the deal due to their earlier involvement in scandals market rigging. Eight of those lenders are now free to manage future bond syndications under the program, the European Commission said.
The banks are Deutsche Bank, Crédit Agricole, JPMorgan, Citigroup, Barclays, UniCredit, Bank of America and Nomura, according to a person familiar with the matter. NatWest and Natixis will continue to be excluded for the time being because they have not yet provided relevant information to the EU, the person said. Both banks declined to comment.
“The eight banks have provided information which allows the Commission to conclude that their further exclusion from participation in syndicated transactions in EU bond issues is not justified,” the Commission said in a statement, adding that the decision came after “an in-depth analysis taking into account the corrective measures applied by the institutions concerned”.
The “corrective measures” included evidence of how banks monitor the activities of traders in discussion forums, as well as a document known as a “sworn statement” attesting to compliance with a series of EU standards, the bankers said.
Banks excluded from Europe deals risked missing out on a major new source of fees in European bond markets, as the stimulus fund turns Brussels into one of the region’s biggest borrowers. The Commission paid € 20 million in fees in Tuesday’s inaugural transaction.
Bank of America, Natixis, Nomura, NatWest and UniCredit had been barred from participating in EU syndications because of an antitrust commission ruling last month that they had participated in a bond trading cartel during the euro area debt crisis ten years ago.
Citigroup, JPMorgan and Barclays, in addition to NatWest, were excluded after discovering two years ago that they were involved in the manipulation of the forex markets between 2007 and 2013. Deutsche Bank and Credit Agricole were also excluded due to of an April ruling that they were involved in another bond trading cartel.
Banks initially excluded from syndications included seven of the ten largest by volume of European public and supranational debt sold this year, according to figures from Dealogic.
The 10 banks are on a list of 39 “primary dealers” – banks participating in the regular debt auctions, which the EU will start in September.
The responsibility of bidding at auction can sometimes be costly, so banks generally view syndication fees as a softener for acquiring primary dealer status.