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Bowles: Break up banks that manipulate rates

European Parliament Flages 480

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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  1. Dominic Thomas 26th July 2012 at 1:38 pm

    As is often the case, Sharon Bowles seems to understand what it would appear, many of those responsible for corporate governance and regulation don’t. Namely that the bigger an organisation is, the more “attention” it should have. An argument to make Banks smaller for this reason, is perhaps a rather telling remark on how Sharon regards the degree of success that the regulator has had in regulating large organisations. However, to withdraw the ability of the Regulator to fine a “taxpayer owned bank” negates the reality of commercial responsibility for running any organisation and would merely add fuel to the fire that some are treated more favourably than others. There is a price for everything, the price paid to date for Banks running a mock, is nothing short of scandalous.

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