Biggest bank fines in history: 2014 could be costliest year ever as value of fines rise by 30 per cent

Lynsey Barber
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Citigroup's $7bn settlement is fifth biggest (Source: Getty)

Citigroup’s $7bn settlement with US authorities over an investigation into sub-prime mortgages becomes the fifth largest in the history of banking industry settlements with US regulators.

The sum places Citigroup just behind BNP Paribas which took the fourth spot earlier this month after a record payout for breaking sanctions of $9bn, and Bank of America which made a $9.5bn settlement earlier this year ranking third.

Of 19 fines handed out this year, a quarter rank in the top 20 biggest fines in history, with Credit Suisse and JP Morgan Chase also hit by billion dollar fines, ranking them in 16th and 17th position respectively, based on data compiled by the FT.

The number of fines being handed out to banks fell in the first half of the year, however 2014 looks set to be a tough year for banks in the firing line of authorities as the value of those fines increased.

By 14 July, after Citigroup made the settlement, the value of fines was 30 per cent higher than those handed out for the same period in 2013.

So far this year 19 penalties have been dished out to banks with a total value of $35bn compared to 32 penalties worth $25bn in the same period last year.

The Bank of America is due to incur a significant charge for alleged mortgage mishandling, with reports of the bank negotiating to pay at least $12bn in a settlement with US authorities.

That figure will be the largest bank payout in history if it goes ahead, with Bank of America already having incurred the three largest single charges in history.

The payout would also push up the total figure for 2014 to $47bn, $5bn shy of the record $52bn paid out by banks last year.

Considering the further penalties likely to be incurred by other banks as US regulators continue to pursue the industry over sub-prime mortgages, 2014 has the potential to become the costliest year for banks in history.

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