FIVE of the world’s largest banks, including HSBC and Royal Bank of Scotland, have been fined more than £2 billion by US, UK and Swiss regulators after admitting some of their traders had attempted to manipulate the $5.3 trillion-a-day foreign exchange market.
The Financial Conduct Authority fined HSBC and RBS, along with Citigroup, JPMorgan and UBS a total of £1.12 billion, while the US Commodity Futures Trading Commission (CFTC) imposed financial penalties of $1.48 billion (£880,000) to end its own investigation into the rigging of global currency benchmarks over several years.
The fines mark a record settlement for the FCA, exceeding those imposed in relation to Libor manipulation, and more banks are expected to reach their own deals with the City watchdog and its US counterparts in the coming months.
Martin Wheatley, chief executive of the FCA, said the settlement showed regulators would “not tolerate” behaviour that threatened the “integrity” of the financial markets.
“Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right. They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about,” said Mr Wheatley.
George Osborne, the Chancellor, said the money raised from the fines would be used for “the wider public good”. He said: “Today we take tough action to clean up corruption by a few so that we have a financial system that works for everyone.”
Talks between the banks and the regulators went on right up until the announcement of the fines this morning and in a surprise development, Barclays, which had been expected to announce its own deal with the regulators, said it would not be settling at this time.
In a statement Barclays said: “After discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement.”
UBS was hit with the largest combined fine of $800 million and was the only bank to be fined by Swiss authorities as well as the UK and US regulators.
The fines against RBS totalled $634 million with the taxpayer-backed lender agreeing to pay £217 million to the FCA and a further $290 million fine to the CFTC. HSBC fines were slightly smaller, totalling $618 million, consisting of £216 million to the FCA and $275 million to the CFTC.
US banks Citigroup and JP Morgan were fined a total of $668 million and $662 million respectively.
Sir Philip Hampton, chairman of RBS, said the bank was investigating more than 50 of its own current and former employees over foreign exchange manipulation and said the lender condemned the wrong doing uncovered by regulators.
“The RBS board fully accepts the criticisms within today’s announcements and condemns the actions of those employees responsible for this misconduct. Today is a stark reminder of the importance of culture and integrity in banking and we will rightly be judged on the strength of our response,” said Sir Philip.
The Serious Fraud Office launched a formal criminal investigation into currency market rigging in July and the US Department of Justice is preparing possible prosecutions of individuals alleged to be involved in the scandal.
Banks have already suspended or fired a raft of staff over allegations they were involved in the practice of attempting to move a key currency pricing benchmark around the time at which it was set during the trading day. The Times
