Costa del Sol's Property Specialists

Brussels fines 8 banks €1,7 million for manipulated the Euribor

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The European Commission (EC) in Brussels today announced that 8 international financial institutions have been fined €1,710 million for their involvement in the coordination and manipulation of the change in prices of financial derivatives which affects the interbank rates such as Libor and Euribor. Among the 8 banks being fined are Deutsche Bank, JP Morgan, Citigroup and Société Générale.

It was stressed by the European Commission that these coordinated operations to manipulate the interbank benchmarks have distorted the normal course of pricing derivatives with particular reference being made towards the Euro and Yen.

The Economy Minister, Luis de Guindos, believes the Euribor manipulation "has had an impact in Spain" and went on to say that such practices are "absolutely despicable".

The European Commission believes that the manipulation of the interbank benchmarks has had a direct negative impact on private home loans, contrary to belief by Brussels that the benchmark had been manipulated on a positive curve. As Professor Bernal Miguel Angel, explains, “Prior to the news from Brussels, we were led to believe that this interbank rate had been manipulated upward, but this does not seem to be the case. With banks placing a negative curve, they have made a lot of money during this period”.

As the credibility of banks wanes in peoples mind, the need for stricter regulations and tighter controls on financial institutions is essential if faith is to be restored to the average man on the streets. Only time will tell if any lessons have been learnt.