20th May 2015 16:28
LONDON (Alliance News) - Six major banks were fined USD5.7 billion on Wednesday, as authorities in the US and the UK took action after an investigation into alleged manipulation of currency markets.
The six banks will pay USD2.58 billion to the US Department of Justice and USD1.80 billion to the US Federal Reserve.
Barclays is paying the biggest fine, as it was not part of a settlement agreed with regulators in November 2012. Its USD2.4 billion bill includes about USD441 million to the UK Financial Conduct Authority, USD400 million to the US Commodities Futures Trading Commission, and USD485 million to the New York State Department of Financial Service, as well as fines of USD710 million imposed by the US Department of Justice and of USD342 million by the Federal Reserve.
In addition to its USD2.4 billion fine over forex failings, Barclays also was fined USD115 million by the CFTC for attempted manipulation of and false reporting of US Dollar ISDAFIX Benchmark Swap Rates. The bank had GBP2.05 billion provisioned, largely in connection with the foreign exchange investigation, at the end of the first quarter of 2015, meaning the fines are covered.
"Barclays continues to co-operate with ongoing investigations into FX (including in relation to electronic trading), LIBOR and other benchmark investigations and Precious Metals," the bank said in a statement.
Barclays, Citigroup Inc's Citicorp, JPMorgan Chase & Co and Royal Bank of Scotland PLC agreed to plead guilty to conspiring to manipulate the price of dollars and euros in the foreign exchange spot market in the deal with the DOJ.
Royal Bank of Scotland will pay USD395 million to the DOJ and USD274 million to the Federal Reserve over the forex scandal. It had GBP654 million provisioned at the end of the first quarter of 2015, meaning it is fully covered for the costs.
The bank said it has reached an agreement to settle antitrust actions brought on behalf of plaintiffs which had entered forex transactions with or it or other banks, with the deal subject to execution of a final settlement agreement and approval of the federal court in New York.
Barclays and RBS shares surged after the news of the fines came out during afternoon trading Wednesday, with Barclays closing up 1.4% and RBS up 0.6%. "It seems investors feared the worst and that cumulative USD6 billion slap on the wrists is seen as a light touch," said IG Markets analyst Joshua Mahony.
Bank of America was fined USD205 million by the Federal Reserve. It was not fined by the DOJ.
Swiss bank UBS AG's move to settle with US authorities over the foreign exchange rigging allegations earlier on Wednesday suggested that deals with other banks were imminent. The fines imposed on UBS, included in the USD5.7 billion total, were accompanied by a guilty plea to allegations over the manipulation of Libor interbank benchmark interest rates. It faces no criminal charges and no fine from the DOJ on foreign exchange manipulation.
UBS was given conditional immunity on an antitrust issue relating to euro/dollar collusion by the DOJ's antitrust division in resolving the foreign exchange probe. Its total USD545.0 million in fines included a USD203 million penalty relating to the Libor scandal and the acceptance of a three-year term of probation, after the Department of Justice terminated a non-prosecution deal agreed in 2012 when UBS was fined USD1.5 billion for attempting to rig Libor.
Barclays, which was fined GBP290 million in relation to the Libor scandal back in June 2012, said its fine from the DOJ on Wednesday included USD60 million due to violating a key term of the non-prosecution agreement entered at the time, but Barclays said the authority did not "declare a breach" of that deal, unlike the case of UBS.
The agreement between UBS and the DOJ, the Federal Reserve and the Connecticut Department of Banking comes about six months since the bank was sanctioned by the Swiss Financial Market Supervisory Authority, after the regulator found that its employees in Zurich "at least attempted" to manipulate foreign exchange benchmarks. FINMA forced UBS to pay CHF134 million at the time, while the UK FCA fined it USD371 million and the US CFTC fined it USD290 million.
The fines, which came in November 2014, formed part of more than USD4 billion in fines imposed on a group of banks comprised of HSBC Bank, Royal Bank of Scotland, JPMorgan Chase Bank, Citibank, Bank of America and UBS.
The news comes one day after South Africa's Competition Commission initiated an investigation into foreign currency traders over alleged price fixing, with the focus being on trade in currency pairs involving the rand. The banks under investigation in South Africa are BNP Paribas, BNP Paribas South Africa, Citigroup Inc, Citigroup Global Markets (Pty) Ltd, Barclays Bank PLC, Barclays Africa Group Ltd, JP Morgan Chase & Co, JP Morgan South Africa, Investec Ltd, Standard New York Securities Inc and Standard Chartered Bank.
By Samuel Agini; [email protected]; @samuelagini
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