The European Union has excluded 10 of the worst-hit banks in the debt market from managing lucrative bond sales as part of a €800 billion redemption fund, citing historic violations of antitrust rules.
Brussels’ Biggest borrowing spree ever On Tuesday it began selling new 10-year bonds to fund the NextGenerationEU program under a so-called syndication loan, in which a group of banks is paid to mobilize demand from investors.
But 10, including big players such as JPMorgan, Citigroup, Bank of America and Barclays, have been told they cannot participate in these deals due to their past involvement in market manipulation scandals, according to people familiar with the matter.
A spokesman for the European Commission, which handles debt issuance on behalf of the European Union, said banks found to have violated EU competition rules “will not be invited to bid for individual joint transactions”. “The Commission applies a rigorous approach to ensuring that the entities it works with are appropriate to be a counterparty to the European Union.”
The spokesperson added that banks found guilty of antitrust violations would appear to have taken “remedial measures” to prevent it from happening again before they were allowed to bid for the group loans.
Bank of America, Natixis, Nomura, NatWest and UniCredit blocked due to antitrust commission Last month They were involved in a bond-trading cartel during the eurozone debt crisis a decade ago.
Citigroup, JPMorgan and Barclays – as well as NatWest – have also been banned after finding out two years ago they were involved in Currency market manipulation Between 2007 and 2013, people familiar with the matter said. Deutsche Bank and Credit Agricole were also excluded due to a ruling in April that they were involved in a Various bond trading cartelpeople said. All banks declined to comment.
The list includes seven of the 10 largest banks by volume of European and transnational government debt sold so far this year, according to figures from Dealogic.
The 10 banks barred from group lending are among 39 so-called “core dealers” – the banks that have the responsibility to bid for bonds during regular debt auctions, which the EU will start in September. This responsibility can be costly at times, however, investment banks usually consider the fees they earn from syndications as sweetening to taking on primary trader status.
Without Hedging – Markets, Finance and Strong Opinion
Robert Armstrong explains the most important market trends and discusses how the best minds on Wall Street respond to them. Participation Here To send the newsletter directly to your inbox every day of the week
“There is a delicate balance in the relationship between the issuers and the primary dealers, and that risks upsetting that,” said a senior banker at one of the lenders barred from syndicated deals. “These issues they are raising are from a long time ago, and they have been settled.”
Banks involved in Tuesday’s opening redemption fund bonds were BNP Paribas, DZ Bank, HSBC, Intesa Sanpaolo, Morgan Stanley, Danske Bank and Santander. Investors have placed more than 140 billion euros in debt orders worth 20 billion euros, according to the commission.
The recovery fund, agreed by EU member states last year, is set to turn Brussels into one of the region’s biggest borrowers.