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MAS returns S$10 billion it fined banks in rates probe

SINGAPORE — The Monetary Authority of Singapore (MAS) has returned about S$10 billion in temporary fines levied on 19 banks, including the three local lenders it disciplined last year as part of a sweeping global probe into the alleged manipulation of financial benchmarks and foreign exchange rates.

SINGAPORE — The Monetary Authority of Singapore (MAS) has returned about S$10 billion in temporary fines levied on 19 banks, including the three local lenders it disciplined last year as part of a sweeping global probe into the alleged manipulation of financial benchmarks and foreign exchange rates.

The regulator said the lenders, which include DBS, United Overseas Bank (UOB), Oversea-Chinese Banking Corp (OCBC), UBS, Bank of America Merrill Lynch, Royal Bank of Scotland and Deutsche Bank, had done enough to help prevent a repeat of past failings.

In response to a Financial Times query on whether the banks had received their money back now that the 12-month period for the temporary fines had passed, the central bank said: “The MAS has returned the additional statutory reserves to the 19 banks.”

It added: “These banks have completed the remedial actions to strengthen the governance, internal controls and surveillance systems for their benchmark submissions and trading operations.”

The move draws a line under a two-year saga that played out as Singapore joined an ever-expanding global investigation into the rigging of benchmarks, focused on the London Interbank Offered Rate (Libor).

The MAS started looking at the Singapore Interbank Offered Rate (Sibor), the local equivalent of Libor, as well as a smaller benchmark known as the Swap Offered Rate, after the United States and United Kingdom authorities in 2012 fined Barclays more than US$450 million (S$582 million) for attempting to manipulate the London benchmark.

Singapore later expanded its inquiry to all financial benchmarks, including forex benchmarks used to settle non-deliverable forwards, from 2007 to 2011.

The MAS in June last year punished 20 banks after it found “deficiencies in the governance, risk management, internal controls and surveillance systems” relating to banks’ benchmark submissions. It also revealed that 133 traders had tried to rig three interest rate and forex benchmarks, but there was no conclusive finding that any attempted manipulations were successful.

The regulator ordered 19 of the banks to lodge about S$10 billion in statutory reserves with the MAS, with the money kept at zero interest. The effect has been to deprive the banks of money that they could have lent out at a time of increased regulatory pressure to bolster banks’ capital.

UBS, RBS and ING were required to post S$1 billion to S$1.2 billion each with the MAS, while Bank of America Merrill Lynch, BNP Paribas and OCBC were required to lodge S$700 million to S$800 million each.

Barclays, Credit Agricole, Credit Suisse, Deutsche, Standard Chartered, DBS and UOB each posted S$400 million to S$600 million each. A further six banks — ANZ, Citibank, JPMorgan, Macquarie, Bank of Tokyo-Mitsubishi and HSBC — each had to lodge S$100 million to S$200 million.

All banks had to put staff through extra training and strengthen compliance. While Singapore’s banking industry already implemented last year a system for setting benchmarks, the MAS has also proposed a regulatory framework for these gauges.

It plans to introduce specific criminal and civil sanctions under the Securities and Futures Act for manipulation of any financial benchmark. THE FINANCIAL TIMES

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