Barclays and RBS among banks fined over €1bn by European Commission

  • Barclays and RBS among banks fined over €1bn by European Commission

Barclays and RBS among banks fined over €1bn by European Commission

The EU Commission has fined five banks €1.07bn (£940m) for rigging foreign exchange markets for 11 currencies, it announced today.

The first decision imposed a total fine of €811.2m on Barclays, RBS, Citigroup and JP Morgan in relation to a case referred to as the "Forex - Three Way Banana Split" cartel.

The investigation found some traders in charge of foreign exchange spot trading for the relevant banks exchanged sensitive information and trading plans. One of the chatrooms was named "Essex Express 'n the Jimmy" - all the traders except one lived in the British county of Essex and met on the train on the way to the city of London.

Other chatroom names included the "Three way banana split" and "Two and a half men".

The banks colluded on trading strategies to rig the spot foreign exchange market for 11 currencies, said the European Commission. "These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets".

A sixth bank, UBS, avoided a penalty because it blew the whistle on the cartels.

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 USA class action suit related to foreign exchange market rigging. Credit Suisse Group AG was separately charged by the European Union over FX collusion a year ago and a fine may come at a later date.

The financial industry has been hit with billions of Euros in fines worldwide over the last decade for the rigging of benchmarks used in many day-to-day financial transactions. Former US attorney general Loretta Lynch in 2015 said the banks engaged in a "brazen display of collusion" to game markets.

A JP Morgan spokesperson said: "We are pleased to resolve this historical matter, which relates to the conduct of one former employee". "This kind of behaviour has no place at the bank we are today; our culture and controls have changed fundamentally during the past ten years".

Citigroup and Barclays declined to comment.

The fines for Barclays and RBS are covered by the two British banks' existing provisions and in line with expectations, according to Edward Firth, an analyst with Keefe, Bruyette & Woods in London.

According to Brussels, the banks formed those cartels in order to influence 11 different currencies, including the euro, United States dollar, pound sterling, Japanese yen, Swiss franc, and others.

The Essex Express cartel involving UBS, Barclays, RBS and MUFG, was given a 257.7 million Euro fine, with the penalty against Barclays the largest for this cartel at 94.2 million Euros.

The EU is continuing to investigate banks for possible EU antitrust violations. The findings went on to show how most of the traders appeared to know each other and coordinated their trading strategies through online chatrooms. UniCredit SpA said it faces a possible fine from the eurozone probe.