May 22, 2017 / 12:59 PM / 2 years ago

EU antitrust regulators to scrutinise syndicated loans

FILE PHOTO: European Union (EU) flags fly in front of the European Central Bank (ECB) headquarters in Frankfurt, Germany, December 3, 2015. REUTERS/Ralph Orlowski/File Photo

OXFORD, England (Reuters) - European Union antitrust regulators are to put major financial services firms under the microscope by examining the impact of syndicated loans on credit markets.

“The fact that the (European) Commission commissions a study in a specific market does not in any way imply that there is anti-competitive behaviour taking place or that the Commission would open an investigation into that market,” spokesman Ricardo Cardoso said in an email on Monday.

In Europe, bank loans traditionally accounted for around 70 percent of lending to companies and other borrowers. This contrasts with the United States where the credit markets have made up some 70-80 percent of where companies borrow.

The European Commission said its interest had been prompted by the growing importance of loan syndication, in which institutional investors and banks lend to a borrower for a fee.

Companies face penalties up to 10 percent of their global turnover for breaching EU antitrust rules and the bloc has fined banks including Deutsche Bank (DBKGn.DE), JPMorgan (JPM.N), RBS (RBS.L), Citigroup (C.N) and Societe Generale (SOGN.PA) a total of more than 1 billion euros ($1.1 billion) in recent years.

Authorities around the world have taken a similarly tough line against rate-rigging and other infringements.

The study is expected to take nine months and will focus on six countries, according to a tender for the study issued by the EU executive, which did not name them.

“The study will examine the structure and process of loan syndication, also in light of recent regulatory reforms which aim to increase supervision and capital requirements,” Cardoso said.

Parties wishing to carry out the study for the commission have until June 6 to submit their offers.

Editing by Philip Blenkinsop and Alexander Smith

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