Deutsche Bank hit hardest as EU fines 6 banks €1.7 bn for rate-rigging

The European Union has imposed fines of €1.7 billion ($2.3 billion) on six banks for rigging the benchmark interest rate Libor (London interbank offered rate), with Germany's Deutsche Bank slapped with the stiffest penalty of €725 million.

France's Societe Generale will have to pay €446 million and Britain's RBS €391 million for manipulating interest-rate benchmarks, the European Commission announced on Wednesday.

US lenders JP Morgan and Citigroup will have to pay fines between €70 and €80 million, while British broking firm RP Martin has been fined €247,000.

Whistle blowers, Britain's Barclays and Switzerland's UBS, escaped fines over rate-rigging. Barclays was the first bank to settle a fine for attempting to falsify the Libor benchmark.

There had been suspicions about rate-rigging during the 2008 financial crisis, but the scandal reached full force last year.

The banks were involved in manipulating interest rate derivatives denominated in euro and the Japanese yen, the EC said.

''What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, ... but also the collusion between banks who are supposed to be competing with each other,'' EU Competition Commissioner Joaquin Almunia said.

''Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few,'' he added.

Libor, which is the benchmark for interest rates, form the basis of the rates set for €1,000 trillion worth of various financial transactions each day and acts as reference for everything from mortgages to credit cards.