BRUSSELS: The European Commis­sion fined US banking giant JP Morgan more than 61 million euros ($78m) on Tuesday for its role in rigging benchmark international interest rates.

JP Morgan worked with Royal Bank of Scotland in 2008-09 to fix interest rates on Swiss franc LIBOR contracts, another example of major banks colluding “instead of competing with each other,” EU Competition Commissioner Joaquin Almunia said.

“Our economy needs a healthy, transparent, well-functioning financial sector. This is why antitrust rules in this sector must be strictly enforced,” Almunia said.

LIBOR, the London Interbank Offered Rate, is a key benchmark, in effect used to price the trillions of dollars (euros) in financial instruments, from student loans to mortgages, bought and sold every day on the markets.

Tiny differentials add up to huge profits and abuse of LIBOR and related benchmarks around the world have been discovered by authorities probing the markets after the global financial crisis of 2007-08.

Many critics blame the collapse on the reckless and corrupt practices allowed to flourish in what they say was an ‘anything goes’ attitude in parts of the world of high finance, with governments then forced to step in at huge cost to the taxpayer to bailout failed banks — including RBS, which is now state-owned.

Many of the biggest banks have been ensnared by US and British LIBOR probes, among them Barclays and Lloyds of Britain, Deutsche Bank, Citigroup, Bank of America and Bank of New York Mellon.

At the same time, there are parallel investigations into charges that the top banks similarly rigged foreign ex­­change rates to get an unfair advantage.

Almunia said that a second similar LIBOR case involved RBS, JP Morgan and Swiss giants UBS and Credit Suisse who fixed a pricing element for the contracts which should have been determined by market forces.

Published in Dawn, October 22nd, 2014