Bowles: Break up banks that manipulate rates

26 July 2012 | By Steve Tolley

Senior MEP Sharon Bowles has called for banks that attempt to manipulate interest rates to be broken up rather than fined.

Last month, Barclays was fined £290m after it admitted its traders had attempted to manipulate both the Libor and Euribor rates. A number of other banks are being investigated by UK, US and European authorities, including RBS, UBS and Citigroup and at least three others in continental Europe.

Yesterday, the European Commission proposed amending EU legislation on market abuse to make it a criminal offence to manipulate benchmarks such as Libor and Euribor.

Bowles, who is chair of the European parliament’s economic and monetary affairs committee, says hitting banks that have received support from European taxpayers with fines “may be an oxymoron” and that those found guilty of manipulating rates should face being broken up.

She says: “Since the start of the crisis we have had revelations of complexity, concealment and total failure of understanding what has been going on or of any moral compass. It is clear that we must change the culture in banking and I doubt that it is possible to do this through regulation and supervision alone. Not only have banks become too big to fail, they are too big to manage and too big to supervise.

“There are competition aspects to this behaviour, which is like a cartel, and the full force of competition policy should be brought to bear. However crippling fines on banks which have benefited from taxpayer’s money may be an oxymoron. The punishment should rather be the breaking up of big institutions, by which I mean beyond simply separating retail and investment banking.”

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