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With the German Landesbanks facing fines for subsidized borrowing and a slew of euro banks under fire for gouging customers on changing French francs for Deutschmarks, it seems extraordinary that the European Commission is still pursuing eight Austrian banks for having had regular lunches together at the Hotel Bristol in Vienna - the so-called Lombard Club. The banks' lawyers must frame a response by the middle of November.
On September 16 DG4, the directorate general for competition, sent 1,000-page letters to the eight banks saying they had two months to answer allegations that they had had at least 300 meetings at various levels of seniority, and colluded on margins and lending policy. The bulk of the evidence had been collected in dawn raids on the banks in June 1998. The eight banks are: Bank Austria, Erste Bank, RZB, PSK, Bawag, Raiffeisenlandesbank Niederösterreich-Wien, Niederösterreichische Landesbank-Hypothekenbank and Österreichische Volksbanken.
The banks don't feel they have much chance against what they privately call "a political argument". It was part of Austria's ordnungspolitische Vereinbarung (political framework agreement) in the early 1960s that the banks should act as a cushion for interest-rate volatility.