EU Removing a Ban on Eight Banks Previously Banned from Bond Sales

According to the European Commission, eight banks were previously excluded from syndicated debt sales backing the European Commission’s up to €800 billion (US$950.7 billion) Covid-19 recovery fund. On Friday the EU executive said that they will be allowed to take part in future issues.

According to Dialogic, Many of the Banned banks are Europe’s go-to banks in the public sector bond market; seven are among the top 10 fee earners from associated debt sales in this market since 2020.

The exclusion related to past breaches of antitrust rules, lenders found being part of three cartels in the past few years. One saw several banks confiscated over tinkering in FX spot. Another one found some banks planned on trading strategies and pricing between 2010-2015 on public sector bonds – debt issued by government-linked institutions. A third one is related to a cartel of dealers at various banks in the primary and secondary market for European government bonds.

Consequently, Senior SSA bond market participants have challenged the European Commission’s decision. The Commission’s actions have also increased fears that other European borrowers could follow suit.

The EU said it wanted to see evidence they had taken corrective action before allowing them to take part. As they have indicated later, the eight banks have provided information that allows the Commission to decide that their further exclusion from participation in syndicated transactions in EU bonds is not warranted.

According to a Commission source the reinstated banks include Nomura, UniCredit, Credit Agricole, JPMorgan, Citigroup, Barclays, Bank of America, and Deutsche Bank and they can take part in the next syndicated debt sale.

The EU executive is still evaluating the other two banks banned from the bond sale. Those banks, Natixis, and NatWest are refusing to comment.