Banks Fined for Price-Rigging

Several major banks have been fined by Mexico’ antitrust authority, charged with collusion on the peso bond market between 2010 and 2013.

Barclays, Deutsche Bank, Santander, Citibanamex, Bank of America, BBVA and JP Morgan were fined just over MX$35 million (US$1.74 million) by the Federal Economic Competition Commission (COFECE), with Deutsche Bank and Barclays receiving the largest fines of the group.

Deutsche Bank received a fine of MX$8.70 million (US$430,000), while Barclays received a fine of MX$6.35 million (US$315,900). JPMorgan received the lowest fine out of the group at MX$378,505 (US$18,800). The fines bring an end to the four-year investigation undertaken by COFECE in which 142 “illegal agreements” between traders were found. The agreements were part of a price-rigging effort to benefit the banks involved.

“The Commission proved […] that the banks and traders mentioned established 142 agreements in violation of the Federal Economic Competition Law (LFCE), to manipulate prices and establish the obligation of not trading and/or not acquiring certain government securities in specific transactions (not general agreements), which had a direct impact on the price of the related instruments in such transactions in the secondary market,” reads the report.

One example offered in the report is the banks’ agreement to increase a quotation price for an afore, a pension fund. It added that these price-rigging practices had “generated a damage to the market of MX$29.39 million (US$1.46 million),” negatively affected the country’s public finances and reduced the public’s ability to save.

Yet the banks may have gotten off lightly. According to Bloomberg, the fines handed out equate to just 4 percent of the potential penalties the banks could have received and fall well short of the US$20.7 million that Barclays and Deutsche Bank were forced to pay European and US regulators in a 2015 case that came about because of COFECE’s investigation.

“The Deutsche Bank AG, Barclays Plc, Bank of America Corp., Citigroup Inc.’s local unit Citibanamex, Banco Bilbao Vizcaya Argentaria SA, Banco Santander Mexico SA and JPMorgan Chase & Co. were fined a combined MX$29.4 million (US$1.46 million) out of a potential MX$680 million (US$33.81 million),” said Bloomberg.

In 2018, CNBV fined Citibanamex, BBVA, Barclays, Credit Suisse and Deutsche Bank over US$1 million after evidence was uncovered that the banks manipulated bond-trading volumes.