Sections

Five banks hit with €1bn in fines after ‘banana split’ FX cartel uncovered

Related Categories

The European Commission has fined five banks more than €1bn in total for their involvement in two cartels in the spot foreign exchange market.

The two settlement decisions are the result of an investigation into Barclays, the Royal Bank of Scotland (RBS), Citigroup, JPMorgan, UBS and MUFG Bank in relation to 11 currencies, including the euro, dollar, sterling and yen.

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 traders in this cartel were from UBS, Barclays, RBS, Citigroup and JP Morgan, and communicated in three different online chatrooms between December 2007 and January 2013.

The second decision by the Commission related to the so-called “Forex – Essex Express” cartel and resulted in a total fine of €257.7m for Barclays, RBS and MUFG Bank.

Traders from UBS, Barclays, RBS and Bank of Tokyo-Mitsubishi (now MUFG Bank) communicated through two chatrooms, the Commission said, between December 2009 and July 2012.

According to the Commission: “UBS received full immunity for revealing the existence of the cartels, thereby avoiding an aggregate fine of circa €285m.”

Commissioner Margrethe Vestager, in charge of competition policy, said the decisions would “send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets”.

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

The Commission’s investigation found that some individual traders in charge of FX trading on behalf of the banks exchanged “sensitive information and trading plans”, which then “enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when”.

A spokesperson for MUFG Bank said: “The European Commission has found that the high standards that we aspire to in our business were not met on this occasion. We are committed to ensuring integrity and compliance with the regulatory authorities in every jurisdiction in which we operate, and have taken a number of measures to prevent this occurring again.”

In a statement, RBS and its subsidiary NatWest Markets (NWM), said: “RBS, together with NWM, have been fined a total of €249.2m relating to conduct which took place in two groups of chatrooms in periods between December 2007 and November 2011. The aggregate fine is fully covered by existing provisions in NWM.”

A JP Morgan spokesperson stated: “We are pleased to resolve this historical matter, which relates to the conduct of one former employee. We have since made significant control improvements.”

Citigroup and Barclays declined to comment.

Related images

  • there is a spate of financial legislation coming from the european commission

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2570

    Asset class: Direct Real Estate.
    Asset region: Europe excluding Switzerland.
    Size: 150m.
    Closing date: 2019-10-30.

Begin Your Search Here
<