RBS and HSBC among five banks fined record total of £2bn by regulators for fixing foreign exchange markets
- State-backed RBS fined £217m by FCA, and $290m by US regulator
- Citibank, JPMorgan Chase and UBS also fined
- Barclays says it continues to hold discussions with regulators
Royal Bank of Scotland and HSBC are included in a group five of the world's biggest banks ordered to pay fines totalling £2billion by regulators as a first punishment for rigging the foreign exchange market.
The penalties imposed by British, US and Swiss authorities after an 18-month investigation relate to the rigging of the £3trillion-a-day market, and add to the large sums already collected over the Libor fixing scandal.
The UK's Financial Conduct Authority alone has issued record fines worth £1.1billion on the five banks for failing to control business practices in their foreign exchange trading operations.
The cost of misconduct: HSBC, Barclays and RBS have each had to set aside millions as a result of their misconduct
State-backed RBS has been fined £217million by the FCA, as well as $290million (£182million) by the US Commodity Futures Trading Commission.
The others involved in the settlement are Citibank, JPMorgan Chase and UBS. Barclays said it continues to hold discussions with regulators.
The FCA penalties dwarf the £532million imposed by the regulator on banks and City brokers over the previous big regulatory scandal involving the manipulation of the interbank lending rate, Libor.
Barclays last month set aside £500million to cover possible exposure to forex penalties from the UK and other unnamed regulators. RBS made a provision of £400m and HSBC earmarked £236million for the UK regulator.
FCA chief executive Martin Wheatley said: 'Today's record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right.
'They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about.'
An inquiry by the Bank of England found that no official was involved in any unlawful or improper behaviour in the forex market.
However one member of staff was aware that bank traders were sharing information about client orders for the purpose of 'matching' - a practice that can increase the potential for improper conduct - but did not raise the alarm to superiors.
The Bank of England's review, carried out by Lord Grabiner, extracted and applied search terms to 1.8million documents and reviewed nearly 66,000 documents and 87,000 telephone calls.
More than 30 traders have been fired, suspended, put on leave, or resigned since the probes started, and the Serious Fraud Office has launched a criminal investigation. Dealers found guilty of manipulating the market could face jail and banks could face prosecution.
RBS said today it has placed six individuals into a disciplinary process, three of whom are currently suspended, pending further investigation.
It said it has analysed millions of documents and is reviewing the conduct of more than 50 current and former members of trading staff around the world as well as dozens of supervisors and senior management.
The bank's chairman Sir Philip Hampton said: 'The RBS board fully accepts the criticisms within today's announcements and condemns the actions of those employees responsible for this misconduct.
'Today is a stark reminder of the importance of culture and integrity in banking and we will rightly be judged on the strength of our response.'
Switzerland's Finma regulaor warned several past and present UBS employees yesterday that they could face enforcement action, according to reports in the Wall Street Journal.
The US Department of Justice is also involved, with JP Morgan saying that the DoJ is conducting a criminal investigation. The bank said various authorities, including the FCA, are probing its forex trading.
Allegations of forex rigging form just one of a long line of scandals including Libor rate manipulation and the mis-selling of PPI loan insurance. They are likely to lead to even more calls for clawbacks from this year’s bonus pools.
RBS chief executive Ross McEwan has said in the past that the forex scandal could be at least as bad as the Libor affair.
The bank last year was fined £390million by UK and US authorities in that debacle. At its most recent results the taxpayer-owned bank had to add £100m to the amount needed to cover mis-selling of PPI and £180million for an IT fiasco in 2012.
After falls yesterday, in early trade today RBS shares were just 0.1p lower at 377.6p, while HSBC lost 5.7p to 631.8p, and Barclays shed 4.75p 229.85p.
Separately yesterday, emerging markets bank Standard Chartered, which has no retail operations in the UK is to close up to 100 branches to save costs. Standard Chartered shares were 10.1p lower at 930.5p.
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