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The EU has excluded 10 of the most affected banks from the debt market from the sale of lucrative bonds as part of its € 800 billion recovery fund, for historic breaches of antitrust rules.
Brussels the largest he has ever lent starts Tuesday with the sale of a new ten-year bond to fund the NextGenerationEU program under so-called syndication, where a group of banks is paid to generate investor demand.
But ten, including big players like JPMorgan, Citigroup, Bank of America and Barclays, have been told they can’t participate in these deals due to prior involvement in market manipulation scandals, according to people familiar with the matter. .
According to a spokesman for the European Commission, which manages the issuance of debt on behalf of the EU, banks that breached EU competition rules “will not be invited to bid on individual syndicated transactions”. “The Commission implements a strict approach to ensure that the entities it works with are eligible to be an EU counterpart.”
Banks found guilty of antitrust violations will have to show they have taken “corrective measures” to prevent them from recurring before they are allowed to bid for syndications, the spokesman added.
Bank of America, Natixis, Nomura, NatWest and UniCredit were unable to participate due to an antitrust commission sentence last month who participated in a bond trading cartel during the eurozone debt crisis a decade ago.
Citigroup, JPMorgan and Barclays, in addition to NatWest, have also been banned due to the finding they had been involved in for two years. manipulating foreign exchange markets between 2007 and 2013, people familiar with the matter said. Deutsche Bank and Crédit Agricole are also excluded due to an April ruling they were involved in a different bond trading cartel, people said. All banks refused to comment.
The list includes seven of the top ten banks by volume of European public and supranational debt sold so far this year, according to data from Dealogic.
The ten banks excluded from the syndications are among the list of the 39 so-called “primary distributors”, who are responsible for bidding bonds during regular debt auctions, which the EU will begin in September. This liability can sometimes be costly, so investment banks often consider the commissions they earn from syndications as a sweetener to acquire principal trader status.
“There is a delicate balance in the relationship between issuers and primary distributors, and this runs the risk of upsetting it,” said a senior banker of one of the lenders who had no syndicated shares. “These problems they pose are long overdue and have been resolved.”
Banks working on Tuesday’s initial recovery fund bond are BNP Paribas, DZ Bank, HSBC, Intesa Sanpaolo, Morgan Stanley, Danske Bank and Santander. According to one of the banks, investors placed more than 140 billion euros in orders for debts of 20 billion euros.
The recovery fund, agreed by EU member states last year, is intended to transform Brussels into one of the largest borrowers in the region.
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