As part of its 800 billion euro recovery fund, the European Union has excluded the 10 most hit banks in the debt market from lucrative bond sales because they have historically violated antitrust rules.
Brussels’ The biggest lending frenzy ever Beginning on Tuesday, a new 10-year bond will be sold to fund the NextGenerationEU program under a so-called syndicate and pay a group of banks to attract investor demand.
But according to people familiar with the matter, 10 companies, including major companies such as JPMorgan Chase, Citigroup, Bank of America and Barclays, were told that they were unable to participate in these transactions due to previous scandals involving market manipulation.
A spokesperson for the European Commission, which handles debt issuance on behalf of the European Union, said that banks found to have violated EU competition rules “will not be invited to bid for individual syndicated transactions. “The Commission adopts strict methods to ensure that the entities with which it cooperates are suitable to be EU counterparties.”
The spokesperson added that banks convicted of violating antitrust laws will be required to show that they have taken “remedial measures” to prevent such incidents from recurring before they can be allowed to bid for syndicates.
Bank of America, Natixis, Nomura Securities, NatWest, and UniCredit were prevented from participating due to committee antitrust Verdict last month They participated in the bond trading cartel during the Eurozone debt crisis ten years ago.
Citigroup, JPMorgan Chase and Barclays Bank-and NatWest-were also banned because they were discovered two years ago Manipulate the currency market According to people familiar with the matter, between 2007 and 2013.Deutsche Bank and Crédit Agricole were also excluded because they were ruled to participate in Different bond trading cartels, People said. All banks declined to comment.
According to data from Dealogic, the list includes 7 of the 10 banks with the largest European government and supranational debt sold so far this year.
The 10 banks banned from joining the syndicate are on the list of 39 so-called “primary dealers” who are obliged to bid for bonds in the EU’s fixed-term debt auction that will begin in September. However, this liability can sometimes prove to be expensive, so investment banks usually view the fees they earn from syndicates as a sweetener to gain primary dealer status.
“There is a delicate balance between the issuer and the primary dealer, which may disrupt this balance,” said a senior banker at one of the banks that is prohibited from syndicated transactions. “The problems they raised were a long time ago and have been resolved.”
The banks participating in Tuesday’s first recovery fund bond are BNP Paribas, German Central Cooperative Bank, HSBC, United Sao Paulo Bank, Morgan Stanley, Danske Bank and Santander Bank. According to one of the banks, investors placed more than 140 billion euros in orders for the 20 billion euros of debt.
The recovery fund agreed by EU member states last year will transform Brussels into one of the largest borrowers in the region.