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JPMorgan, Other Major Banks Excluded From Landmark European Bond Program

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The European Union excluded some of the world’s largest banks from working on a massive new debt issuance program, citing recent cases in which regulators punished them for forming cartels in the bond and currency markets.

The banks include

Barclays PLC,

BCS -0.44%

JPMorgan Chase & Co,

JPM -1.76%

Nomura Holdings Inc.,

NMR -1.29%

UniCredit SpA,

Bank of America Corp.,

Citigroup Inc.,

and

Credit Agricole SA,

according to an EU official.

The European Commission is assessing whether “the primary dealers found guilty of breaching antitrust rules have taken necessary remedial measures to terminate these practices,” according to an emailed statement. Pending the assessment’s completion, these institutions “will not be invited to tender for individual syndicated transactions.”

JPMorgan, Nomura, Citigroup and Bank of America declined to comment. The other banks didn’t immediately respond to requests for comment.

The EU was set Tuesday to begin issuing bonds to fund its fiscal spending plans to support member states to recover from the pandemic. The program, the first major pan-European debt program, will eventually raise around 800 billion euros, equivalent to nearly $1 trillion.

The issuance is a landmark development in the bloc’s financial management. Known as common bonds, they will be issued on behalf of all member countries. As part of the region’s response to Covid-19, richer nations such as Germany and the Netherlands dropped previous resistance to backstopping debt that would fund spending in less well-off parts of the bloc.

Commercial banks help governments issue bonds, marketing the debt to investors and advising on pricing details such as the interest rate. The banks collect a fee as payment.

The EU ban references four cases of cartels that were penalized in 2019 and 2021. Nomura and UniCredit were fined nearly €130 million and €69 million, respectively, in May for illegally colluding on trades in European government bonds. Bank of America received a penalty of €12.6 million for coordinating prices for sovereign bonds denominated in dollars, while Crédit Agricole was fined nearly €4 million in April.

In 2019, the EU fined a group of banks including Barclays, JPMorgan and Citigroup €1.07 billion for manipulating the foreign-exchange market for 11 currencies including the euro, pound, yen, Swiss franc and U.S. dollar. They did this by exchanging sensitive information and trading plans through online chat rooms.

Other banks were also involved in these cartels but haven’t sought to work on the EU’s bond deals.

BNP Paribas SA,

Intesa Sanpaolo SpA,

DZ Bank,

HSBC Holdings PLC,

Morgan Stanley

worked on Tuesday’s EU bond deal as joint lead managers.

Danske Bank A/S

and

Banco Santander SA

acted as co-lead managers. The deal is ongoing and is expected to be finalized Tuesday.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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