(Bloomberg) — Mexico’s antitrust agency on Monday said it had found evidence of collusion to manipulate Mexican bond prices during a span of 10 years, and local media reported that seven global banks had been notified in the case.
The Mexican units of Banco Bilbao Vizcaya Argentaria SA, Citigroup Inc., Banco Santander SA, Bank of America Corporation, Barclays Plc, Deutsche Bank AG and JPMorgan Chase & Co. were notified of probable violations of Mexico’s antitrust laws, columnist Dario Celis reported on Monday October 14th, in El Financiero.
Bloomberg reported last week that seven financial institutions had been notified in the case.
Following a nearly three-year investigation, antitrust agency Cofece said in a statement that it had notified “various economic agents” of their probable responsibility for acting in concert to manipulate Mexican bond prices. Those notified will be able to defend themselves and the Cofece board will ultimately decide if it will impose fines that could reach as much as 10% of a company’s annual Mexican revenue.
Banco Santander Mexico said in a statement that it would present evidence that it did not violate competition law. “Santander Mexico considers that at all moments it has complied with applicable legislation,” the bank said.
Representatives of Citigroup unit Citibanamex, Bank of America, Barclays, Deutsche Bank and JPMorgan declined to comment. Representatives of BBVA’s local unit didn’t immediately respond to a request for comment.
BBVA gets about 40% of its profit from its Mexican business, helping the bank make up for sluggish earnings in Europe. Revenue in the Latin American country totaled 7.2 billion euros ($7.9 billion) last year, according to the bank’s annual report.
Cofece launched its probe of banks in late 2016 and was looking for patterns of cartel-like behavior that, in other markets, cost banks billions of dollars in fines.
Sergio Lopez, the head of Cofece’s investigative unit, said in a telephone interview that the agency was prohibited by law from commenting on details of the case, such as to name which banks were to have allegedly participated, but he confirmed that the agency had found evidence of possible illegal conduct by several financial institutions as well as an unspecified number of individuals.
Lopez said that investigators had found evidence that companies had conspired to manipulate bond prices. He said they also found evidence that companies negotiated among themselves to withhold bond inventories from the market in order to benefit one another.
The probe examined conduct from late October 2006 through late October 2016, Lopez said. The notifications were based on evidence obtained from raids on companies, records provided by the companies as well testimony by individuals, Lopez added. Cofece has whistle blower protection provisions that allow companies and individuals to reduce penalties for cooperation with the agency. He said investigators had found evidence of possible crimes in several different periods over the 10-year span that was probed.
On November 2018, Mexico’s banking and securities regulator CNBV fined six global banks, two brokers and a group of traders a total of around 17.6 million pesos ($900,000) for violating securities law on volume manipulation, according to the regulator’s database. CNBV launched its investigation after Cofece announced in April 2017 that it had begun a probe in late 2016. Santander Mexico said it had not been fined in that case.
Late last month, a U.S. district judge threw out a suit by pension funds against 10 global banks for allegedly manipulating the Mexican bond market. That suit had cited the Cofece probe as the foundation of the pension funds’ case against the banks.