JPMorgan, other major banks excluded from iconic European bond program

The European Union has ruled out some of the world’s biggest banks from working on a massive new debt issuance program, citing recent cases in which regulators have punished them for forming cartels in the bond and money markets.

Banks include Barclays PLC,

BCS -0.24%

JPMorgan Chase & Co,

JPM -1.95%

Nomura Investments Inc.,

NMR -1.29%

UniCredit SpA,

Bank of America Corp.,

Citigroup Inc.,

and Crédit Agricole SA,

according to an EU official.

The European Commission is assessing whether “the primary dealers found guilty of violating antitrust rules have taken the necessary corrective measures to put an end to these practices”, according to a press release sent by email. Pending completion of the assessment, these institutions “will not be invited to bid on individual syndicated transactions”.

JPMorgan, Nomura, Citigroup and Bank of America declined to comment. The other banks did not immediately respond to requests for comment.

The EU was due to start issuing bonds on Tuesday to fund its budget spending plans to help member states recover from the pandemic. The program, the first major pan-European debt program, will ultimately raise around 800 billion euros, or nearly 1,000 billion dollars.

The show is a historic development in the financial management of the block. Called common bonds, they will be issued in the name of all member countries. As part of the region’s response to Covid-19, richer countries like Germany and the Netherlands have abandoned previous resistance to support debt that would fund spending in less well-off parts of the bloc.

Commercial banks help governments issue bonds, market debt to investors, and advise on pricing details such as the interest rate. Banks charge a commission as payment.

The EU ban refers to four cartel cases that were sanctioned in 2019 and 2021. Nomura and UniCredit were fined nearly € 130 million and € 69 million, respectively, in May for illegal collusion on European government bond transactions. Bank of America was fined 12.6 million euros for coordinating the prices of dollar-denominated sovereign bonds, while Crédit Agricole was fined nearly 4 million euros in April.

In 2019, the EU fined a group of banks including Barclays, JPMorgan and Citigroup € 1.07 billion for manipulating the foreign exchange market for 11 currencies, including the euro, pound, yen , the Swiss franc and the US dollar. They did this by exchanging sensitive information and trading plans through online discussion forums.

Other banks were also involved in these cartels but did not seek to work on EU bond transactions.

BNP Paribas SA,

Intesa Sanpaolo SpA,

DZ Bank, HSBC Holdings PLC,

Morgan Stanley worked on Tuesday’s European bond deal as a co-lead. Danske Bank A / S and Banco Santander SA acted as co-lead managers. The deal is ongoing and is expected to be finalized on Tuesday.

Write to Anna Hirtenstein at [email protected]

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