The United States Commodity Futures Trading Commission (CFTC), Britain's Financial Conduct Authority (FCA) and the Swiss Supervisory Markets Authority, FINMA, on Wednesday announced penalties totaling $3.4 billion (2.7 billion euros) following probes into foreign exchange rigging.
The fines were imposed on US banks JPMorgan Chase and Citibank, as well as on Britain's Royal Bank of Scotland and HSBC Bank. Switzerland's biggest bank, UBS, received the biggest penalty, paying $661 million to US and UK regulators, and 134 million Swiss francs to FINMA. British Barclays Bank was still being investigated for manipulations, FCA said.
"Today's record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right," said FCA Chief Executive Martin Wheatley. He also called on the banks to ensure that their traders don't "game the system to boost profits" again.
In global foreign exchange markets, some $5.3 trillion change hands every day, with about 40 percent of trades being made in London. However, the fixing of benchmark rates for the US dollar and the euro is controlled by a group of major banks, whose decisions have a huge impact on mortgage rates and asset prices.
In the wake of the 2008 financial crisis, market regulators in the US, Great Britain and Switzerland uncovered that traders at those banks colluded to share information about client activity to improve their individual trading positions. They organized into groups using nicknames such as "The Players," "The 3 Musketeers" and "1Team," crafting trading strategies to ensure that their banks make a profit.
In a statement, Royal Bank of Scotland (RBS) chairman Philip Hampton accepted the fine, condemning the actions of his traders.
"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," Hampton said.
The banks fined have already factored in the prospect of stiff penalties, with Citigroup, for example, having set aside $600 million and JPMorgan Chase about $400 million.
uhe/sgb (AFP, Reuters, dpa)