Earthquake in the banking system: the Competition Council sanctioned 10 Romanian banks with fines of 3.73 billion lei. Allegations of tampering with ROBOR
The Competition Council sanctioned 10 banks with total fines of 3.73 billion lei (approximately 710 million euros), following an investigation into possible violations of competition rules in the process of establishing the ROBOR.
10 banks sanctioned for alleged anti-competitive practices at ROBOR Photo: archive, the truth
“The Competition Council sanctioned 10 banks with fines totaling 3.73 billion lei (approximately 710 million euros) for violating the competition rules, namely the Competition Law and the Treaty on the Functioning of the European Union, by coordinating behavior in the ROBOR establishment procedure”, the institution transmitted.
The authority claims that the financial institutions would have coordinated the behavior within the fixing procedure, by exchanging confidential and strategic information regarding the level of quotations, which would have influenced the formation of the index used as a reference for loans.
The President of the Competition Council, Bogdan Chirițoiu, stated that the decision does not concern the regulations of the banking sector, but exclusively the behavior of the institutions during the analyzed period, being based on the violation of the competition legislation, including the European norms stipulated by the Treaty on the Functioning of the European Union. According to him, the decision was adopted unanimously by the plenary session of the institution.
“Our decision did not concern the regulations or policies in the banking sector, but is limited exclusively to the behavior of the banks during the ROBOR fixing period and is, of course, based on the finding of the violation of the competition rules, not of other norms. The sanctioning decision was taken unanimously by the Plenary of the Competition Council. The extensive public debates prior to the adoption of the decision are not usual and have generated confusion, which is why clarifications are needed.” said Bogdan Chirițoiu, the president of the Competition Council.
Following the investigation, the authority found that although in theory the quotations under the ROBOR fixing should be independent, in practice there would have been a correlation between the participating banks, particularly in terms of reported levels.
The problem would have been more pronounced for maturities of 3, 6 and 12 months, where the volume of actual transactions is low, making the average more dependent on estimates than on actual transactions. ROBOR is used as a reference index for calculating interest on loans, and even small variations can influence the final cost borne by borrowers.
The Competition Council emphasized that it has a set of evidence that must be analyzed in conjunction and that the problem identified strictly concerns the firm quotations transmitted during the fixing period, which should have remained confidential.
“We have a set of evidence that must be analyzed in conjunction. The transparency of transactions is beneficial in some situations. The problem arises, however, in the case of firm quotations transmitted during the fixing period, which must remain confidential, an essential aspect in the case of maturities where the volume of actual transactions is reduced. Considering the large volume of loans, variations in the size of a fraction of a percentage can generate substantial amounts“, added the president of the Competition Council.
The authority also showed that, at the international level, including in the European Union and the United States, there were similar cases sanctioned in the past, which also led to adjustments to the regulations regarding the establishment of benchmarks.
The investigation was launched at the end of 2022 and also went through the approval procedure within the cooperation mechanism with the European Commission. Following the decision, the sanctioned banks have 60 days from the receipt of the motivation to propose measures to remedy the practices considered anti-competitive, which will be analyzed and approved by the Competition Council.
The fines applied are as follows: Banca Comercială Română 577.36 million lei, BRD – Groupe Société Générale 412.47 million lei, Banca Transilvania 875.74 million lei, a separate sanction of 85.03 million lei related to the act committed by OTP Bank Romania, ING Bank 405.91 million lei, Raiffeisen Bank 442.49 million lei, Exim Banca Românească 96.49 million lei, CEC Bank 332.98 million lei, UniCredit Bank 431.03 million lei, Intesa Sanpaolo Bank Romania 28.1 million lei and Libra Internet Bank 45.86 million lei.
ROBOR is the reference rate of the interbank money market that influences the calculation of interest for loans granted to legal entities (including state entities, such as local public authorities), but also the calculation of interest for natural persons who have loans granted before 2019 and have not applied to switch to IRCC.
We remind you that competition legislation prohibits any agreements between companies that prevent, restrict or distort competition on the Romanian market.
The decisions of the Competition Council are enforceable, and the fines applied represent revenues to the state budget. The National Fiscal Administration Agency (ANAF) implements the sanctioning decision of the competition authority and executes the fines
The decision of the Competition Council is enforceable, and the fines represent revenues to the state budget and will be implemented by ANAF. However, the banks can appeal the decision to the Court of Appeal within 30 days from the communication of the reasons.
