The EU excluded 10 banks from running bond sales as part of its €800 billion (US$970 billion) recovery fund due to historic breaches of antitrust rules, the Financial Times reported.
Beginning on Tuesday, June 15, a new 10-year bond will be sold to fund the NextGeneration EU 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.
Banks found to have breached EU competition rules “will not be invited to tender for individual syndicated transactions,” said a spokesman for the European Commission, which handles debt issuance on behalf of the EU.
“The Commission implements a strict approach to ensuring that the entities with whom it works are fit to be a counterparty of the EU.” Banks found guilty of antitrust breaches will be required to show they have taken “remedial measures” to prevent them happening again before they will be allowed to bid for syndications, the spokesman added.
Bank of America, Natixis, Nomura, NatWest, and UniCredit have been prevented from taking part due to a Commission antitrust ruling last month that they 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 barred due to a finding two years ago that they were involved in manipulating currency markets between 2007 and 2013, people familiar with the matter said. Deutsche Bank and Crédit Agricole are also excluded due to an April ruling that they were involved in a different bond trading cartel, the people said. All the banks declined to comment.
The list includes seven of the 10 largest banks by volume of European government and supranational debt sold so far this year, according to figures from Dealogic. The 10 banks barred from the syndications are among a list of 39 so-called “primary dealers” — banks that have a responsibility to bid for bonds during regular debt auctions, which the EU will begin in September. This responsibility can sometimes prove costly, however, so investment banks typically regard the fees they earn from syndications as a sweetener for taking on primary dealer status.