EU slams Barclays, 4 major banks €1bn for forex infractions

Mathew Dadiya, Abuja

The EU’s powerful antitrust authority on Thursday slammed five major banks including Barclays and Citigroup, more than a billion euros for collusion in the massive foreign exchange currency market.

The European Commission sanctioned Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan and Japan’s MUFG Bank a total of 1.07 billion euros ($1.2 billion) after finding that traders colluded to fix exchange rates using electronic chat rooms, a statement said.

The commission said Swiss giant UBS received no fine as it revealed the collision to the authorities.

EU Competition Commissioner Margrethe Vestager, said, “These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets.

“The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers”, she added.

The decision involves two cases of forex manipulation, with the first known as “Essex Express ‘n the Jimmy” because of all the traders (except Jimmy) lived in the county to the east of London, the commission said.

The other one was called “Three-way banana split”, though the EU’s executive arm did not explain why.

“Some of the traders created the chat rooms and then invited one another to join, based on their trading activities and personal affinities, creating closed circles of trust,” the commission explained.

The collision took place between 2007 and 2013, roughly the years of the financial crisis and has been sanctioned by other authorities, including the US.

Except for Japan’s MUFG, the banks cooperated with the commission and in return received lighter fines than the EU’s maximum amount.

“We are pleased to resolve this historical matter, which relates to the conduct of one former employee. We have since made significant control improvements,” said a spokesperson for JPMorgan.

Several of the banks, including Barclays, had already provisioned for the fines in earlier filings.

While large, the cartel fines are lower than a 1.3 billion euro penalty for banks for rigging Euribor rates and below a record 3.8 billion euro penalty for collusion between truckmakers, according to Bloomberg.

They exchanged sensitive information and trading plans in two cartel groups – one running from December 2008 to January 2013, and another from December 2009 to July 2012, the commission said.

Aljazeera reported that RBS, which faces paying 249 million euros ($279m), told the London Stock Exchange it was responding to inquiries from other regulatory bodies regarding “past failings in foreign exchange trading”.

Citigroup will have to pay 310.8 million euros ($348m), while JP Morgan faces a bill for 228.8 million euros ($256m). Barclays will pay 210.3 million euros ($236m) and MUFG must pay nearly 70 million euros ($78m). Their penalties were reduced after agreeing not to challenge the ruling.

The five banks facing the billion-euro fine had combined 2018-2019 revenues of 215 billion euros ($241bn).