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AMSTERDAM (AP) - The European Commission has fined a group of major global banks a total of 1.7 billion euros ($2.3 billion) for colluding to profit from the manipulation of key interest rates.
The banks that received fines, which include JPMorgan, Citigroup and Deutsche Bank, are accused of manipulating for years European and Japanese benchmark interest rates that affect hundreds of billions of dollars in contracts globally, from mortgages to credit card bills.
Switzerland's UBS bank escaped a whopping 2.5 billion-euro fine only because it informed the Commission, the EU's executive arm, of a cartel's existence and cooperated with the subsequent investigation.
"We want to send a clear message that we are determined to find and punish these cartels," competition commissioner Joaquin Almunia said Wednesday.
The Commission is only the latest to punish banks for profiting from manipulating interest rates, after similar cases brought by U.S. and national European market regulators.
The banks regularly contribute data to help compile market interest rates, which are then used as benchmarks for loans in the wider economy. The banks are thought to have profited by cooperating to fix the rates higher or lower depending on whether they _ or their clients _ held investments in derivatives that stood to gain.
In a first cartel, which operated from 2005 to 2008 and was focused on euro-denominated derivatives, Deutsche Bank received the largest fine, of 468 million euros, followed by Societe Generale with 445 million euros. Royal Bank of Scotland was fined 131 million euros.
Deutsche Bank Chief Executive Juergen Fitschen referred to the euro cartel as a "legacy issue" caused by "past practices of individuals" at the bank. Fitschen has worked there since 1987 and became CEO in 2012.
He acknowledged participating in the cartel had been a "gross violation" of the bank's ethics. But he said the fine wouldn't hurt the bank's profits as it has already made provisions for fines it deems likely from regulators.
Professor Martin Hellmich of the Frankfurt School of Finance & Management said it was impossible to determine who was hurt by the rate-fixing based on the limited amount of detail the Commission has so far released.
He said the fines appeared to have been levied mostly on the basis of market share, and their size was likely determined in part by pragmatism: "They have to be big in order to be meaningful to these banks, but they shouldn't be so high as to bring the banks into trouble," he said.
Barclays escaped a 690 million-euro fine because it was the bank that notified the Commission of the euro cartel's existence, while JPMorgan, HSBC and Credit Agricole denied wrongdoing.
"This is not the end of the story," Almunia said. The commission is also investigating potential bank cartels in the credit default swaps and foreign exchange markets.
A second cartel fined by the Commission on Wednesday operated from 2007 to 2010 and focused on derivatives based on the Japanese yen. The largest fines went to RBS and Deutsche Bank, 260 million euros each, while UBS received immunity from fines amounting to 2.5 billion euros.
RBS, which has previously been fined by the U.S. and British authorities in rate-fixing cases, was apologetic.
"The RBS board and new management team condemn the behavior of the individuals who were involved in these activities," said Chairman Philip Hampton. "There is no place for it at RBS."
Associated Press reporters Dave McHugh, Danica Kirka and Lori Hinnant contributed to this story from Frankfurt, London and Paris.
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