Five global banks fined S$4.3 billion for forex rigging

LONDON — Regulators in the United States, Britain and Switzerland have ordered five banks to pay about US$3.3 billion (S$4.3 billion) in the first wave of penalties since a global probe into the rigging of key foreign-exchange benchmarks began last year, as errant banks are expected to face more sanctions in the coming days or even years.

Switzerland’s UBS was ordered to pay the most at US$800 million, based on statements from the US Commodity Futures Trading Commission (CFTC), Britain’s Financial Conduct Authority (FCA) and the Swiss Financial Market Supervisory Authority (Finma). Citigroup will pay US$668 million, followed by JPMorgan Chase at US$662 million. Royal Bank of Scotland was fined about US$634 million and HSBC US$618 million. Barclays, which had been in settlement talks, said it was not ready for a deal.

Banks and individuals could still face further penalties and litigation following the 13-month probe into allegations dealers at the biggest banks colluded with counterparts at other firms to rig benchmarks used by fund managers to determine what they pay for foreign currency. The probes have expanded to include whether traders used confidential information to take bets on unauthorised personal accounts, and whether sales desks charged clients excessive commissions.

More than 30 traders have been fired, suspended, put on leave or resigned since the probes began last year. The US Justice Department and Britain’s Serious Fraud Office are also leading criminal probes into the US$5.3 trillion-a-day currency market.

“The traders put their own interest ahead of their customers, they manipulated the market — or attempted to manipulate the market — and abused the trust of the public,” FCA chief executive officer Martin Wheatley said in London yesterday. The regulator will press banks to review their bonus plans and claw back payments already made.

Banks involved in the rigging are “likely to face a heavy burden of potential litigation in coming years”, said Mr Tim Dawson, an analyst at Helvea in Geneva who covers financial firms.

The fines come more than two years after the first banks settled with the UK and US authorities over allegations they rigged the London interbank offered rate (Libor), a benchmark interest rate used in US$300 trillion of securities including swaps and home loans. A dozen firms have been fined at least US$6.5 billion in investigations related to Libor and its derivatives.

The Libor investigations, which have not yet concluded, sparked a broader review of dozens of benchmarks used in markets ranging from oil to precious metals. AGENCIES