Four major banks have been fined a total of £104.46 million after traders were found to have shared sensitive information about UK Government debt in private chat rooms, according to the Competition and Markets Authority (CMA).
Between 2009 and 2013, traders at Royal Bank of Canada (RBC), Citi, HSBC, and Morgan Stanley used one-to-one chat rooms to exchange details on the buying and selling of UK Government gilts—bonds issued to raise funds for public spending.
The largest fine was handed to Royal Bank of Canada, which will pay £34.2 million. Meanwhile, Morgan Stanley faces a penalty of £29.7 million, HSBC £23.4 million, and Citi £17.2 million.
All four banks saw their fines reduced after agreeing to settle, with Citi receiving the biggest discount as it settled before the others.
A fifth bank, Deutsche Bank, avoided a fine altogether after voluntarily reporting its misconduct to regulators, thereby gaining immunity under competition law leniency rules.
A blow to market integrity
The CMA’s investigation, which began in 2018, concluded that traders at these banks engaged in anti-competitive practices by exchanging confidential information, which could have influenced pricing and trading strategies.
Juliette Enser, CMA executive director of competition enforcement, stated:
“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.”
She added that the fines reflect the CMA’s determination to crack down on anti-competitive behaviour, warning that the penalties would have been significantly higher had the banks not taken extensive steps to ensure compliance with competition laws.
How did the scheme work?
Gilts are a form of UK Government bonds, effectively an IOU issued by the state. Investors buy these bonds in exchange for regular interest payments, while the Government raises funds for public spending.
At the time of the infractions, the Bank of England was buying gilts in response to the financial crisis, a process known as quantitative easing.
By sharing sensitive information about their trading activities, the traders were distorting market competition, potentially impacting the prices and availability of gilts.
Extent of the wrongdoing
The CMA revealed that not all banks were involved for the entire period.
- HSBC’s misconduct ended in 2010
- Morgan Stanley’s last recorded offence was in 2012
- Deutsche Bank and Royal Bank of Canada were the worst offenders, exchanging sensitive information on a total of 41 separate occasions between November 2009 and April 2013
The findings raise concerns about the conduct of some of the world’s largest financial institutions, particularly in a period when trust in the banking sector was already severely damaged by the 2008 financial crash.
Banks step up compliance efforts
Following the probe, all four banks have introduced stringent compliance measures to prevent similar misconduct in the future.
The CMA acknowledged that some of these measures were implemented before the investigation began in 2018, indicating that banks were already aware of potential wrongdoing.
Nevertheless, financial regulators are expected to increase scrutiny on trading practices, ensuring that banks operate with transparency and fairness.
More Read
A history of banking scandals
This is not the first time major banks have been penalised for manipulating financial markets.
- In 2015, six banks—including Barclays, JPMorgan, and Citigroup—were fined a combined $5.7 billion for rigging foreign exchange markets.
- In 2012, Barclays, RBS, and UBS were involved in the LIBOR scandal, where they manipulated interbank lending rates, leading to billions in fines worldwide.
These repeated infractions suggest that despite regulatory crackdowns, financial institutions continue to engage in misconduct, raising questions about the effectiveness of penalties as a deterrent.
What happens next?
The CMA’s ruling sends a strong message that anti-competitive practices will not be tolerated. However, critics argue that banks may view fines as a cost of doing business, rather than a real deterrent.
With financial markets more closely watched than ever, regulators are likely to introduce stricter oversight and harsher penalties to restore faith in the sector.
For now, these banks must not only pay hefty fines but also work towards rebuilding public trust and investor confidence—a challenge that continues to loom over the global banking industry.
