BAILED-OUT lender Royal Bank of Scotland has been fined £28.6 million pounds (€32.16 million) for illegally sharing loan pricing details with rival Barclays, Britain’s Office of Fair Trading (OFT) said yesterday.

The OFT said it had imposed the fine, the first it has ever levied on a bank, because RBS executives gave their counterparts at Barclays information on how they priced loans to firms such as accountants and lawyers.

There is evidence Barclays used the information to set its own prices, but the bank escaped a fine because it reported the matter to the OFT, the watchdog said.

“Any company that discloses confidential future pricing information to its competitors risks a substantial penalty,” said Ali Nikpay, the OFT’s senior director of cartels and criminal enforcement.

“It is important that companies operating in the UK understand the seriousness of such conduct and ensure effective competition compliance throughout their organisation.” RBS and Barclays are the leading providers of loans to professional services firms in Britain.

RBS, 84 per cent state-owned after receiving a taxpayer-funded bailout at the height of the banking crisis, said the price sharing was “a deeply regrettable and isolated case.”

“We have co-operated fully with the OFT throughout and have introduced stringent additional competition-law training to ensure that this unacceptable behaviour does not happen again,” RBS said, adding that of the two employees involved, one had left the bank, while the other faced suspension.

The OFT said the price-sharing took place between October 2007 and February or March 2008, 10 months before the British government was forced to nationalise RBS in order to prop it up in the wake of the credit crunch.

“The timing of the infringement in the early months of the credit crunch demonstrates the heightened danger of cartel practices during difficult trading times,” said Dr Andreas Stephan, an expert in competition law at the University of East Anglia.

Barclays said it called in the OFT in March 2008 after it discovered that some executives “had been unilaterally approached from outside Barclays in a manner which we regarded as inappropriate”. The OFT’s inquiry did not go beyond the professional services division, Barclays added.

RBS’s fine was reduced from £33.6 million because the bank admitted breaking the law and agreed to co-operate with investigators, the OFT said.

The watchdog has the power to fine companies up to 10 percent of their turnover for breaches of competition law, but has a policy of showing leniency towards companies who report their wrongdoing.

The biggest fine the OFT has ever applied to a single firm is the £121.5 million penalty it slapped on British Airways for price fixing in August 2007. – (Reuters)