THREE of Britain’s biggest banks, including Royal Bank of Scotland, are among half-a-dozen facing record regulatory fines up to a combined £2 billion to settle an investigation into foreign exchange market manipulation.
Britain’s financial regulator held secret talks this week with Barclays, RBS, HSBC, UBS, JP Morgan Chase and Citigroup to try and pave a way for a group financial settlement to be agreed by the end of 2014, sources said.
The banks are said to be keen on such a group settlement as it would stop them being singled out for public opprobrium in the wake of the Libor-rigging scandal.
It is said the latest penalties are set to exceed the biggest fine of £160 million paid by UBS over revelations relating to the fixing of the interbank-lending Libor rate.
One source said the aggregate fine from the Financial Conduct Authority (FCA) could come in at around £1.8bn, with the maximum fine for one bank put at between £300m and £400m, and others being pegged at below £300m.
These figures are believed to include a 30 per cent discount for early settlement of the issue by the banks involved. The issue of forex-manipulation is particularly damaging for the City of London as, due to a mixture of history and favourable time zone between the US and Asia, its foreign exchange market is larger than America/Japan combined.
Sky News, which first reported this week’s meetings, has said a deal with the FCA could be announced as early as November. The FCA launched an investigation last October into allegations that bank traders used advance knowledge of client orders to try and rig benchmark indexes in the £3 trillion a day forex market.
The Bank of England (BoE) appointed a barrister last March to examine whether any of its officials were involved in the alleged manipulation.
One BoE employee was suspended earlier this year, pending an investigation into failings in the central bank’s “rigorous internal control processes”.
More than 30 traders from various banks have been put on leave, suspended or fired. But no individual or bank has been formally accused of any wrongdoing.
The coordinated process for the currency market probe contrasts with 2012 when Barclays stepped forward as the first bank to settle over the Libor investigation and was fined £290m by the UK and US authorities. That led to the ousting of Barclays chief executive Bob Diamond, who in January 2011 had told the Treasury select committee that the “time for remorse is over” in the banking industry and that the rebuilding of the economy was paramount.
Sources said talks with the FCA on forex manipulation are ringfenced from other negotiations which may be taking place between banks and regulators in other countries.
l The UK arm of Santander has poached Susan Allen from Royal Bank of Scotland to become managing director, UK banking, with responsibility for the strategic direction of the business.
Allen has some 25 years’ experience in banking and has held a variety of senior management positions at RBS, where she most recently led the asset finance, invoice finance and transaction services businesses for corporate clients.