23 October 2016
Britain's Barclays will pay half of the estimated US$6 billion settlement by five of the world's biggest lenders. Photo: Bloomberg
Britain's Barclays will pay half of the estimated US$6 billion settlement by five of the world's biggest lenders. Photo: Bloomberg

Big banks to pay US$6 bln in forex rigging scandal

Five of the world’s biggest banks are expected to announce agreements to collectively pay more than US$6 billion to settle allegations of foreign exchange manipulation.

The announcement by Barclays, JPMorgan Chase, Royal Bank of Scotland, Citigroup and UBS could come as early as Wednesday, according to the Financial Times.

The highest fines will be borne by Britain’s Barclays, which is expected to agree to pay about £2 billion (US$3.1 billion). Royal Bank of Scotland and United States giants JPMorgan Chase and Citigroup are all expected to pay about US$1 billion.

Switzerland’s UBS will pay less than US$800 million, the report said, citing people familiar with the situation.

UBS’s payment is lower because the bank alerted the US authorities to issues in the forex markets.

Barclays’s fine is higher because the lender was not part of a US$4.3 billion November settlement with Britain’s Financial Conduct Authority, the US Commodity Futures Trading Commission and Swiss regulators.

The other banks are only settling with the US authorities this time around, mainly the Department of Justice and the Federal Reserve’s board of governors.

Subsidiaries of the banks are likely to plead guilty to US criminal charges, according to people familiar with the matter.

There might also be “implications” for 2012 agreements that UBS and Barclays struck which allowed them to avoid prosecution for manipulating the Libor benchmark interest rate, the said.

Banks will also be allowed to sack some employees they had kept on the books pending the outcome of the investigations, they said.

All five banks declined to comment.

The latest fines for rigging the US$5.3 trillion-a-day forex market come after a lengthy inquiry into alleged collusion among banks to share information and co-ordinate their trading to manipulate exchange rates in ways that favored the banks’ books.

Securing agreements with the DOJ would mark a milestone for the banks which have endured years of big fines for everything from interest rate rigging to money laundering, but there is still a long road to go.

The DOJ’s criminal investigation into individuals is continuing and charges are not expected to be filed this week.

Britain’s Serious Fraud Office also has a parallel criminal inquiry open into individuals. The New York Department of Financial Services is also still investigating some aspects of the forex scandal.

People familiar with the matter stressed that while banks now had a good idea of their fines from the DOJ, the figures could still change.

Equally, the DOJ is keen to make an announcement on Wednesday but the date could slip a day or two if the final negotiations are protracted

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