The Competition Council has fined 10 banks a total of 3.73 billion lei, equivalent to approximately 710 million euros, for breaching competition rules in the process of setting the ROBOR. Some of the credit institutions targeted by sanctions have already announced that they will challenge the decision in court.
The President of the Competition Council, Bogdan Chirițoiu, stated on Sunday at Digi24 that the investigation did not identify a classic cartel among banks, but an exchange of information between the institutions involved in the ROBOR setting process.
The competition authority argues that the banks participating in the ROBOR fixing procedure coordinated their behavior through exchanges of confidential and strategic information, especially regarding prices, instead of transmitting independent quotations.
"Our decision did not target regulations or policies in the banking sector, but is exclusively related to the banks' behavior during the ROBOR fixing period and is based, of course, on the finding of the violation of competition rules, not other norms.
The sanctioning decision was unanimously taken by the Plenum of the Competition Council. The extensive public debates prior to the decision are not usual and have caused confusion, which is why clarifications are necessary," stated Bogdan Chirițoiu, the President of the Competition Council, as quoted by News.ro.
Chirițoiu: It Was Not a Classic Cartel
The President of the Competition Council specified that the investigation did not identify an explicit agreement between banks to set a certain level of ROBOR, but rather an exchange of information that should not have existed among competitors.
"We are not saying that a classic cartel took place, that banks met and decided in an afternoon what the ROBOR level should be. The main issue is that one bank sees the quotation of another bank, plus the fact that they exchanged information among themselves, discussed methodologies, and so on. So, too much collaboration, too much exchange of information among firms that are competitors," stated Bogdan Chirițoiu.
Why ROBOR Matters for Loans
ROBOR is the interbank market reference rate and influences the calculation of interest rates for loans granted to businesses, local public authorities, and other legal entities. ROBOR also matters for individuals who have loans taken before 2019 and have not requested the transition to IRCC.
According to the Competition Council, in the fixing procedure, the firm quotations submitted by banks should have been independent. However, the authority argues that the banks coordinated their behavior based on competitors' quotations.
The Council explains that the independence of these quotations is particularly important for maturities where the volume of actual transactions is low, such as those at 3, 6, and 12 months. In these cases, the average of actual transactions cannot be used as a relevant indicator, and the resulting ROBOR level from fixing ends up being used in calculating interest rates.
A higher ROBOR level may be favorable to creditors, but directly affects consumers and debtors whose contracts are linked to this index.
"We have a set of evidence that needs to be analyzed collectively. Transaction transparency is beneficial in some situations. However, the issue arises in the case of firm quotations transmitted during the fixing period, which must remain confidential, an essential aspect in maturities where the volume of actual transactions is low. Considering the large volume of loans, variations of the size of a fraction of a percent can generate substantial sums," added Bogdan Chirițoiu.
What Fines the Banks Received
The fines were applied as follows:
- Banca Comercială Română SA - 577.36 million lei;
- BRD-Groupe Société Générale SA - 412.47 million lei;
- Banca Transilvania SA - 875.74 million lei;
- Banca Transilvania SA, for the act committed by OTP Bank România SA - 85.03 million lei;
- ING Bank N.V. Amsterdam Sucursala București - 405.91 million lei;
- Raiffeisen Bank România SA - 442.49 million lei;
- Exim Banca Românească SA - 96.49 million lei;
- CEC Bank SA - 332.98 million lei;
- UniCredit Bank SA - 431.03 million lei;
- Banca Comercială Intesa Sanpaolo România SA - 28.1 million lei;
- Libra Internet Bank SA - 45.86 million lei.
The Competition Council specifies that the decision concerns the violation of the Competition Law and the Treaty on the Functioning of the European Union.
The institution recalls that both at the European Union level and in the United States, competition authorities have previously imposed sanctions for similar practices. Following the issues identified in such cases, national regulations regarding the setting of the ROBOR reference rate have been improved.
However, the Competition Council states that the investigation launched at the end of 2022 identified anticompetitive behaviors among the banks participating in the fixing procedure.
The investigation went through all analysis and control procedures, including the mandatory consultation stage within the cooperation mechanism with the European Commission, considering the violation of the Treaty on the Functioning of the European Union.
Banks have 60 days from receiving the justification of the sanction decision to present action plans to eliminate anticompetitive practices. These plans will be approved by the Competition Council, which states that this way banks will have legal certainty.
The competition authority's decision can be challenged in the Court of Appeal within 30 days from the communication of the justification.
Banks Announce They Will Contest the Sanctions
The initial reactions of some credit institutions targeted by sanctions indicate that the decision will be challenged in court.
The CEO of Banca Transilvania, Omer Tetik, stated that the institution will challenge the sanction and accused the Competition Council of not understanding the functioning of the financial system and the ROBOR calculation rules.
"We will fight to prove our innocence and to show that BT has acted correctly and legally. The Competition Council's decision regarding the 'ROBOR investigation' demonstrates a profound lack of understanding of the financial system's operation and the regulations for calculating the ROBOR," conveyed Omer Tetik.
"The Competition Council's decision encourages populism and undermines the chances of an economic recovery in a complicated period for the country and the economy, a period in which the banking system is the main pillar of economic stability," added the head of Banca Transilvania.
In the case of Banca Transilvania, the cumulative value of the sanctions amounts to nearly 961 million lei.
BRD, in turn, announced that it will challenge the sanction after analyzing the justification of the decision. "BRD strongly disagrees with the investigation's conclusions. After the decision is communicated and the considerations on which it is based are analyzed, the bank will use all legal means available to challenge the Competition Council's decision," the institution stated.
The bank's representatives argue that the institution has complied with the applicable legal and regulatory framework and warn that the effects of the decision go beyond BRD's individual case.
"The reputational impact generated by this decision affects the perception of the entire banking system in Romania, at a time when its stability and its ability to finance the economy are essential," the bank stated.
In response, Chirițoiu stated that it is the right of credit institutions to challenge the decision, but the sanctions remain enforceable. "It is absolutely their right. However, what is important to note is that the decisions are enforceable. So, regardless of whether they challenge them in court, the fines must be paid," he said.
BNR: ROBOR Followed the Key Interest Rate Evolution
The National Bank of Romania stated that the Competition Council's decision does not target the trading regulations agreed upon by the central bank. "Regarding the practices invoked by the Council, we understand that the decision will be challenged in court and will be clarified on this occasion," stated Dan Suciu, the BNR spokesperson.
Cristian Popa, a member of the BNR Board of Directors, rejected the idea that the evolution of ROBOR was determined by an agreement between banks and argued that the index followed the evolution of the key interest rate set by the central bank.
"Not only in Romania have interest rates increased, but also in the Czech Republic, Hungary, Poland. If we look at the FED and ECB, market interest rates have increased everywhere. I don't think central bankers manipulated interest rates," Popa stated, as quoted by Digi24.
According to him, the increase in ROBOR was a direct consequence of the monetary policy adopted to combat inflation. "ROBOR increased because the BNR increased the key interest rate," said the representative of the central bank.
According to the legislation, the fines imposed by the Competition Council represent revenues to the state budget and are enforced by the National Agency for Fiscal Administration (ANAF).