THE three British banks accused of rigging the foreign exchange market are facing a total of about £14bn in fines to settle a welter of investigations into their conduct in the run-up to the financial crisis.
Barclays, Royal Bank of Scotland and HSBC will be hit with the colossal penalties following probes into a range of scandals around the globe.
State-controlled RBS is expected to pay out £6.3bn over the next two years, with the bulk coming from its role in the US sub-prime mortgage meltdown, analysts at Bank of America said. Barclays is facing £4.6bn of penalties, with HSBC forecast to be landed with £3bn of fines.
Regulators have been meting out ever more severe punishments as they hold lenders to account for past excesses. Banks worldwide have already set aside or paid out $220bn (£135bn) in fines and compensation since the 2008 banking crisis, Morgan Stanley said. Lloyds has shouldered the highest penalties of any UK lender after paying more than £10bn to customers mis-sold payment protection insurance.
It is likely to be eclipsed by RBS, which is at the centre of an investigation into alleged manipulation of foreign exchange markets. HSBC, Barclays, JP Morgan, Citi, Deutsche Bank and UBS have also been dragged into the Financial Conduct Authority (FCA) probe.
Over recent weeks, the watchdog has held a series of meetings with executives and lawyers from the banks at its Canary Wharf headquarters. FCA boss Martin Wheatley is understood to be aiming to reach a collective deal with the six financial giants within eight weeks.
The banks have been told they will have to pay substantially more than the £160m that UBS handed over to the UK regulator to settle a separate probe into allegations that some of its traders sought to rig the Libor interest rate benchmark. It is thought the six banks will collectively pay about £1.5bn to the FCA to settle the foreign exchange case, and may be on the hook for billions more in fines from US, European and Asian regulators.
The probe centres on accusations that banks colluded to move prices on the $5.3 trillion-a-day foreign exchange market.
The Sunday Times
