12th Nov 2014 06:43
LONDON (Alliance News) - Regulators in the US, UK and Switzerland Wednesday hit five banks, including HSBC Holdings PLC and Royal Bank of Scotland PLC, with more than USD3.2 billion in fines over foreign exchange failings and attempted manipulation of foreign exchange benchmark rates.
The UK's Financial Conduct Authority imposed fines amounting to USD1.7 billion on the five banks, saying the banks failed to control business practices in their G10 spot foreign exchange trading operations, while the US Commodity Futures Trading Commission ordered the banks to pay more than USD1.4 billion in penalties.
The foreign exchange market is known for its size and liquidity and has daily average turnover of USD5.3 trillion, according to regulators.
The FCA fined Citibank NA USD358 million, HSBC Bank PLC USD343 million, JPMorgan Chase Bank NA USD352 million, The Royal Bank of Scotland PLC USD344 million and UBS AG USD371 million. The CFTC imposed fines of USD310 million each on Citibank and JPMorgan, USD290 million each for RBS and UBS, and USD275 million for HSBC.
In Switzerland, regulator FINMA ordered UBS to disgorge a total of USD138 million.
Barclays PLC, which last month set aside GBP500 million in provisions in light of regulators' investigations into alleged foreign exchange manipulation, is yet to be fined. In a statement that could prove to be ominous, the FCA said it will continue to investigate.
"In relation to Barclays Bank PLC, we will progress our investigation into that firm which will cover its G10 spot FX trading business and also wider FX business areas," the FCA said in a statement.
In a response, a Barclays spokesperson said it had decided against agreeing to a settlement on similar terms to the other banks.
"Barclays has engaged constructively with its regulators, including the UK Financial Conduct Authority (FCA), and the US CFTC, in this round of settlement discussions, and has considered a settlement from these agencies on closely similar terms to those announced this morning," the spokesperson said.
"However, 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," the spokesperson added.
The FCA also announced an industry-wide remediation programme to ensure firms address the root causes of these failings and drive up standards across the market.
"We will require senior management at firms to take responsibility for delivering the necessary changes and attest that this work has been completed," the FCA said.
The FCA said the fines are the largest it, or predecessor the Financial Services Authority, have ever imposed, adding that this is the first time it has pursued a settlement with a group of banks in this way.
By Samuel Agini; [email protected]; @samuelagini
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