Sun, Nov 09, 2014 - Page 13 News List

UK plans forex penalties for six banks: sources

Reuters, LONDON

British regulators investigating allegations of collusion and manipulation in the foreign exchange market could fine a group of six banks as early as Wednesday, people familiar with the matter said.

The six banks are Switzerland’s UBS AG, US banks JPMorgan Chase & Co and Citigroup Inc and Britain’s HSBC Holdings PLC, Barclays PLC and Royal Bank of Scotland Group PLC, sources said. They are expected to be fined a total of about £1.5 billion (US$2.37 billion).

It would be the first settlement in the year-long global probe into the US$5.3 trillion-a-day foreign exchange market. About 35 traders have been suspended or fired by their banks. No individual or institution has so far been accused of any wrongdoing.

A group settlement could be appealing to the banks, after Barclays in 2012 was singled out as the first bank to settle with regulators over a global investigation into the rigging of benchmark interest rates.

Three sources said Britain’s Financial Conduct Authority (FCA) was working to release the coordinated settlement with the banks on Wednesday, although they said that timetable could slip if problems emerge with details.

The regulator said there was no date confirmed for any settlement.

Meanwhile, the US Commodity Futures Trading Commission could also announce a settlement with a group of banks around the same time, one US based source said.

New York’s banking regulator does not plan to coordinate with the impending settlements involving the FCA and certain US authorities, according to a person familiar with the regulator, New York’s Department of Financial Services (DFS).

DFS superintendent Benjamin Lawsky views them as too weak, an indication he is likely to go after the banks later and demand larger penalties, the source said.

Estimates on how much banks would be fined in total vary wildly, especially because it is unclear how much the US Department of Justice would seek as part of is ongoing criminal probes into a group of global banks.

The UK fines are expected to be for lax internal compliance at the banks, oversight failures and possible market conduct breaches by individual employees, but not deliberate market manipulation, sources have said.

The British regulator could fine one bank between £300 million and £400 million, and the other five are expected to be fined £200 million to £300 million, one of the sources said.

The six banks all set aside money for potential settlements of forex investigations in their third quarter results, signaling part of the process was near to a conclusion. The six banks and Bank of America, Deutsche Bank AG and Credit Suisse Group AG have set aside about US$7 billion for legal provisions.

HSBC this week specifically set aside US$378 million for a potential settlement with the UK watchdog.

Earlier this year, banking research firm Autonomous Research LLP put the worldwide potential settlement costs at about US$35 billion.

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