Ubs and Credit Suisse in the spotlight of Comco, the Swiss Competition Authority. The investigation was opened following some reports on possible cartel agreements between different banks accused of having influenced the interbank rates on the London and Tokyo markets as well as the commercial conditions of derivatives, with the aim of obtaining profits with the sale of these financial instruments. In the viewfinder not only the two largest Swiss banks, but also a group of 10 foreign financial institutions: Bank of Tokyo-Mitsubishi UFJ, Citigroup, Deutsche Bank, HSBC, JP Morgan, Mizuho Financial, Rabo-bank, Royal Bank of Scotland, Société Générale, Sumitomo Mitsui Banking Corporation, as well as other financial intermediaries.
“The secretariat of the Comco – states a note from the authority – has received a self-denunciation, according to which many derivatives traders active in various banks have influenced the reference interest rates LIBOR and TIBOR for certain currencies. LIBOR (London Interbank Offered Rate) and TIBOR (Tokyo Interbank Offered Rate) are benchmark interest rates which are supposed to represent the level of interest on the interbank market and are determined by banking associations. These are calculated for different currencies based on the daily information provided by a specific group of banks. By agreeing to the information provided, derivatives traders arguably distorted benchmark interest rates to their advantage. At the same time, it seems that the derivatives traders have agreed on the difference in the price between the purchase and the sale (spread) of derivatives and have therefore sold these financial instruments to customers at conditions that are not normal for the market”.
