European banks, watch out. The European Commission could be coming for you next.
As part of a global effort to crack down on interest-rate manipulation during the financial crisis, the European Commission seized documents from several major banks yesterday. Among those raided was Deutsche Bank’s London office, Reuters reported a source saying. [via CNBC]
Officials also dropped in on a major French bank, according to the Wall Street Journal. The official list of banks examined by the Commission was not released.
Tuesday’s investigation concerned the Euribor – Euro interbank offered rate, a daily average rate at which banks can borrow from each other.
The surprise offensive by the Commission apparently wasn’t hostile, one executive told the WSJ it was more like a “visit.”
The broader world-wide scrutiny into how interest rates are set began over a year ago with probes into the more frequently used Libor,London interbank offered rate, according to the WSJ. Officials suspected that banks may have purposed pushed down their interest rates to make their loans seem less risky amid financial turbulence in 2008.
As part of the Libor investigation, the U.S. Department of Justice have handed subpoenas to several big banks in the U.S. In Japan, officials are investigating Tibor – Tokyo interbank offered rate.
Some banks may already be off the hook – UBS said the Justice Department granted them “conditional leniency or conditional immunity” for participating in the investigation after they were subpoenaed for Libor manipulation earlier this year. Barclay’s is also reportedly cooperating in the investgiation, as the bank noted in its filings this year, according to the WSJ.
Euribor is set by 44 banks, compared to 15 banks that set Libor. This makes the rate harder to manipulate and could weaken the European Commission’s case.