Banks fined US$91mil for colluding on forex rates

Tan KW

Publish date: Fri, 07 Jun 2019, 10:14 AM

GENEVA: Citigroup Inc and Barclays Plc are among global banks fined a total of 90 million Swiss francs (US$91mil) by Switzerland’s competition regulator for their roles in colluding on foreign-exchange rates.

Barclays was fined 27 million francs, Citigroup 28.5 million francs and JPMorgan Chase & Co was hit with a 9.5 million-franc penalty, Switzerland’s Competition Commission said yesterday. UBS Group AG avoided a fine because it helped reveal the existence of the cartel.

The Swiss sanctions come after years of investigations by regulators on both sides of the Atlantic into how traders used chatrooms to fix leading currency exchange rates.

Five of the banks agreed last month to pay 1.07bil (US$1.2bil) to resolve a European Union probe into forex collusion.

Traders at Barclays, Citigroup, JPMorgan, Royal Bank of Scotland Group Plc and UBS ran online chatrooms to share sensitive information over six years in a cartel that was known as the “Three-way banana split,” according to Comco.

Traders at Barclays, MUFG Bank, RBS and UBS operated the so-called Essex Express, named for the commuter train they all took, to fix trades in a similar manner between 2009 and 2012, according to the Swiss regulator.

RBS was fined 22.5 million francs and MUFG Bank Ltd, 1.5 million francs by Comco. An investigation into Credit Suisse Group AG’s role is continuing, while probes into Bank Julius Bär & Co AG and Zürcher Kantonalbank have been ended, the Swiss watchdog said, without saying if those two banks will be sanctioned.

The Swiss sanctions bring a wave of regulatory probes one step closer to conclusion after traders’ manipulation of benchmark foreign-exchange rates was exposed in 2013 in a series of Bloomberg articles, triggering investigations in the US and the UK.

To date, more than a dozen financial institutions have paid about US$11.8bil in fines and penalties globally, with another US$2.3bil spent to compensate customers and investors.

Switzerland’s Comco – as is usually expected – avoided the damning language of its counterparts, saying only that the sanctioned banks “have committed not to conclude such agreements in the future.”

EU Competition Commissioner Margrethe Vestager said last month that its fines “send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets.”

Comco’s decision can be appealed to the Switzerland’s Federal Administrative Court, but it wasn’t immediately clear if any of the banks would do so.

Some of the banks had benefited from a leniency program that led to a reduction of the fine, the regulator said.

Officials at banks including JPMorgan, Citigroup and UBS didn’t immediately respond to calls seeking comment.

Credit Suisse is cooperating fully with Comco’s probe and “intends to vigorously contest the substance of the allegations,” the bank said in an email.

“A number of other regulators have concluded their FX-related inquiries without taking any enforcement action against Credit Suisse,” the bank added.

- Bloomberg

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Undi_PAS

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2019-06-07 10:17

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