EU blocks Citi, 9 other banks from some bond sales over antitrust breaches

The European Union is temporarily freezing out 10 banks from taking part in a series of bond sales under the bloc’s pandemic debt issuance program as it carries out an assessment of their previous breaches of antitrust rules.

Banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Barclays Plc have been blocked from arranging individual syndicated transactions for the NextGenerationEU program by the European Commission.

There will be “a careful assessment of whether the primary dealers found guilty of breaching antitrust rules have taken necessary remedial measures to terminate these practices and are ready to undertake to take steps to avoid their recurrence,” the European Commission said in a statement.

The 10 banks barred from the syndications are among a list of 39 so-called “primary dealers,” which have a responsibility to bid for bonds during regular debt auctions. The EU is expected to begin those in September, with another two syndications due before the end of July.

Upon the completion of this assessment, these “institutions will be admitted to the Primary Dealer Network but will not be invited to tender for individual syndicated transactions,” the statement said.

The other banks affected are Deutsche Bank AG, Nomura Holdings Inc., UniCredit SpA, NatWest Group Plc, Natixis SA and Credit Agricole SA. Spokespeople for the 10 banks declined or didn’t immediately respond to requests for comment. IFR reported the news earlier.

Investor Demand

The first of those sales got underway Tuesday with the bloc set to issue a record 20 billion euros ($24 billion) of 10-year bonds, racking up around 142 billion euros of investor orders. So-called syndications are seen as highly profitable for banks, with orders having surged over the past few years thanks to trillions of euros of support from the European Central Bank.

In April this year, Bank of America was among banks fined about 28.5 million euros by European Union regulators for colluding in chatrooms on trading of U.S. supra-sovereign, sovereign and agency bonds. And in May, Nomura and UniCredit were among those fined for colluding on euro government bond trading during the region’s sovereign debt crisis.

Tuesday’s 10-year bond sale saw Danske Bank A/S and Banco Santander SA appointed joint lead managers, with BNP Paribas SA, DZ Bank AG, HSBC Holdings Plc, IMI Plc and Morgan Stanley as the bookrunners.