Eu widens libor scandal investigation and threatens heavy fines

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banks will soon face even more intense scrutiny and the threat of heavy fines over their alleged involvement in the LIBOR rate rigging scandal  . The European Commission is now widening the

reach of its 18-month antitrust investigations to include Swiss franc-denominated swaps, the _Financial Times _reported late on Thursday. Until now, the probes by the competition authority

have included yen and euro interbank lending rates. Banking authorities are investigating dozens of banks from around the world for colluding to fix LIBOR (London Interbank Offered Rate), a

key interbank lending rate used to price trillions of dollars of financial instruments. Because banks face a penalty of up to 10 percent of their global turnover for each case, those found

to be involved with all three cartels would potentially have to pay fines equal to 30 percent of total revenues, the _FT_ reported. In a speech in Paris scheduled for Friday, European

Union's competition commissioner Joaquín Almunia  is expected to turn up the heat on banks that have been uncooperative with antitrust regulators, the paper said. He is expected to

deliver a stern warning to banks that are unwilling to discuss allegations with investigators. Unlike the United States and the United Kingdom, which have been reaching settlements with

individual banks over their involvement in LIBOR fixing, Europe is going after cartels as a whole and dealing with all participants together. US and UK regulators have already fined three

banks including Barclays  and UBS . RBS settled with US and UK authorities this month, paying a $612 million fine and admitting to manipulating yen, US dollar and Swiss franc LIBOR rates.

German regulators have also been looking into Deutsche Bank's   involvement in the scandal. The EU's approach of going after cartels, by contrast, could take years. The _FT_

reports that Europe may consider settling with banks, but not while some refuse to cooperate with investigators. "We suspect the existence of cartels between certain actors in the

market for derivative products -- banks, but also brokers," said Almunia in the wake of the RBS settlement agreement. "These possible anti-competitive agreements consisting of

manipulating rates could have allowed participants to make unfair additional profits on their market transactions. rr -- with wire reports