European Union fines five major banks 1 bn euros for currency collusion

18 May, 2019, 04:20 | Author: Regina Silva
  • European Union fines five major banks 1 bn euros for currency collusion

Five banks have been fined €1.07bn (£935m) by the European Commission after traders clubbed together to rig the foreign exchange market.

An investigation by the commission found that some individual traders in the banks - who were meant to be direct competitors - "exchanged sensitive information and trading plans" and "occasionally coordinated their trading strategies" in chatrooms.

The Essex express 'n the Jimmy chatroom was so-called because all the traders but "James" lived in Essex and met on a train to London. Other rooms were called the "Three Way Banana Split" and "Semi Grumpy Old Men'".

Commissioner Margrethe Vestager, in charge of competition policy said:"The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers". "These cartel decisions send a clear message that the commission will not tolerate collusive behavior in any sector of the financial markets".

The cartels were exposed by a sixth bank, UBS, which was named in the investigation but avoided a fine after blowing the whistle.

UBS Group, the first to inform European regulators about the collusion efforts, was not fined.

Law firm Scott + Scott said it is preparing to launch a case on behalf of European clients after securing a $2.3 bn (£1.8bn) settlement in a U.S. class action suit related to foreign exchange market rigging. The EC charged Credit Suisse Group a year ago.

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Traders' manipulation of benchmark foreign-exchange rates was exposed in 2013 Bloomberg articles, triggering regulatory probes in the USA, the United Kingdom and Switzerland.

Banks have been hit with billions of dollars in penalties worldwide over the last decade for the rigging of benchmarks used in many day-to-day financial transactions, further damaging the industry's fragile reputation after the financial crisis. Former US attorney general Loretta Lynch in 2015 said the banks engaged in a "brazen display of collusion" to game markets.

JPMorgan said it related to the conduct of one former employee while RBS said it served as a reminder of how it had lost its way in the past. "We have since made significant control improvements", said a spokesperson for JPMorgan.

MUFG is "committed to ensuring integrity and compliance with the regulatory authorities in every jurisdiction in which we operate, and have taken a number of measures to prevent this occurring again", the bank said in a statement.

Barclays and Citigroup declined to comment.

Information exchanged in chatrooms included outstanding customer orders, prices and their open risk positions.

The 11 currencies involved include the euro, British pound, Japanese Yen, Swiss Franc, US, Canadian, New Zealand and Australian Dollars, and Danish, Swedish and Norwegian crowns. UniCredit SpA said it faces a possible fine from the eurozone probe.

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