Six of the world’s biggest banks were punished with a mega $5.7bn (£3.7bn) fine by financial watchdogs yesterday after foreign currency traders were found to have rigged prices to rip off customers.
Barclays, Royal Bank of Scotland, Swiss giant UBS and three US banks – JP Morgan Chase, Citi and Bank of America – were all penalised after a long-running investigation into the $5.3 trillion a day FX market by US and UK regulators.
The sanctions mark the latest day of shame for the banking industry, following the multi-million pound settlements over interest rate fixing in 2013 and fines paid over FX fixing in a separate settlement in November.
However, shares in all the banks rose sharply after the settlements as investors took heart that many of the fines came in lower than expected.
Barclays must pay $2.32bn in total, including a record £284m fine from the UK’s Financial Conduct Authority (FCA), making it the most fined bank alongside Citi for the FX scandal.
Citi paid $1.27bn fines yesterday, on top of $1bn paid in the November.
Barclays, headed by Antony Jenkins, agreed to cough up the cash to the US Department of Justice, the Federal Reserve and the Commodity and Futures Trading Commission (CFTC).
New York’s Department of Financial Services, headed by crusading regulator Benjamin Lawsky, also fined the bank and went further by calling on it to sack a number of FX employees.
“Put simply, Barclays employees helped rig the foreign exchange market. They engaged in a brazen ‘heads I win, tails you lose’ scheme to rip off their clients,” said Lawsky, who is leaving his role after four years.
Jenkins, who took over the helm of the bank after the offences occurred, said people at the bank deeply regretted the misconduct. “I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute,” he said.
All of the Barclays employees named by Lawsky are thought to have been dismissed or are due to be sacked.
RBS was fined by the Department of Justice and Federal Reserve, following fines in 2014 from the FCA and CFTC.
“The serious misconduct that lies at the heart of today’s announcements has no place in the bank that I am building,” said boss Ross McEwan.
While four of the banks – Citi, Barclays, JP Morgan and RBS – pleaded guilty to criminal charges, UBS was given immunity because it was the first to confess misconduct to the DoJ. But it was fined $342m by the Federal Reserve for breaching an agreement with the DoJ over Libor fixing. Bank of America was fined $205m for unsafe and unsound practices. It was fined $250m by the Office of the Controller of the Currency.