In a position statement submitted to the Romania Insider editorial office, the employers’ association of bankers, FinBan, said that the historic fine handed down by the Competition Council to the largest Romanian banks does not entitle every client to compensation.
Earlier this month, the Competition Council said that ten banks breached the competition regulations and the Treaty of Functioning of the European Union (TFEU) by exchanging information with the final aim of coordinating their actions and manipulating the interbank interest rate indices ROBOR, used for the calculation of variable lending interest rates.
To punish the banks, the body set fines totalling RON 3.73 billion (EUR 710 million), shocking analysts and financial experts. In reply, the banks said they would contest the measure. Moreover, in the FinBan reaction, they said that fallout should be limited.
“The first major confusion that must be clarified is this: a fine applied by the Competition Council does not automatically mean that every client has money to receive. The fine is an administrative sanction. It is paid to the state budget. It is not distributed to clients. It does not automatically turn into compensation. It does not in itself establish that every person who had a loan linked to ROBOR suffered an individual prejudice,” FinBan noted in its press release.
According to the association, a competition claim must provide the damage, the causal link, and the amount of the damage that must be proven separately.
“The second major confusion is between contact, coordination, cartel, and manipulation. Not every meeting or general discussion produces an anti-competitive effect,” the same source said. FinBan also argued that financial markets are complicated, and that participants “monitor liquidity, risk, interest rates, government bond yields, the policy interest rate, demand and supply of money, and macroeconomic conditions” every minute. Moreover, the association said that banks are legally obliged to participate together in the market mechanism for setting the index.
“For a sanction of such magnitude, it is not enough to say that contacts existed. It must be clearly shown what conduct was prohibited, why it is anti-competitive, how it affected the index-setting mechanism, and how that effect was transmitted to the cost of loans. Without this evidentiary bridge, the public is left with a big accusation and a small explanation,” the statement said.
Importantly, FinBan pointed out that even the Competition Council did not claim that the banks acted as a cartel against borrowers.
The association also noted that representatives of the National Bank of Romania constantly stated that ROBOR values have not deviated from economic realities.
“The Competition Council has communicated that there is an administrative decision on this matter, but currently, there is no publicly available reasoning to understand it, and there is also strong contestation, including inter-institutional, in a complex case. There is not automatically a sum to be recovered. There is no automatically definitive guilt. To promise otherwise today is not information. It is the sale of illusions,” FinBan argued
On Thursday, June 25, the Romanian Association of Banks requested the publication of the reasoning and of the evidence that formed the basis of the decision by which the Competition Council sanctioned ten credit institutions.
The organisation stated that the decision of the competition authority raises issues of legal certainty, economic predictability, and the credibility of the Romanian state. Representatives of the banking community argued that the credit institutions did not exchange information and did not adopt practices that would compromise the functioning of the money market or affect clients.
(Photo source: Vlad Ispas|Dreamstime.com)
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