Brussels has fined Barclays, RBS, Citigroup, JPMorgan and MUFG €1.07bn for participating in cartels to manipulate the foreign exchange market for 11 currencies.
Citigroup was hit with the biggest fine of €311m, followed by RBS with €249m, JPMorgan at €229m, Barclays at €210m and Japan’s MUFG with about €70m.
The EU is the last major regulatory authority to conclude its investigation into collusion among traders to manipulate major currency benchmarks and exchange rates — allegations that first surfaced in 2013.
But the end of the probe will now clear the way for civil suits in the region, with law firm Scott and Scott poised to launch the European leg of a US class action lawsuit that resulted in a $2.3bn settlement with 15 banks.
EU officials found that two separate cartels used chat rooms, dubbed the “Three Way Banana Split”, “Essex Express” and “Semi-Grumpy Old Men”, to share information about customers’ orders, prices and other trading activities in order to manipulate the spot markets.
The anti-competitive activity took place between 2007 and 2013 for the euro, pound, yen and Swiss franc, the US, Canadian, New Zealand and Australian dollars, and the Danish, Swedish and Norwegian crowns.
The information shared “enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when. Occasionally, these information exchanges also allowed the traders to identify opportunities for co-ordination,” according to the EU.
“Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day,” said Margrethe Vestager, European competition commissioner. “Today we have fined Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan and MUFG Bank and these cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets.”
UBS participated in the cartels but was not fined because it alerted EU officials to the two cartels. The other banks chose to settle the charges with EU regulators and their fines were reduced by 10 per cent.
“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 spokesman for JPMorgan.
A spokesman for Barclays declined to comment. The British bank took a £240m provision related to the forex probe at the end of 2017, according to a filing.
RBS acknowledged the conclusion of the investigation and said in a statement that its €249m fine was “fully covered by existing provisions”. It added that it was co-operating with other unnamed authorities on further, similar probes into past misconduct in currency trading and could face more “material” penalties and consequences.
Authorities in the UK, US, Switzerland and Singapore have hit 15 banks with more than $10bn in fines since 2014 relating to currency collusion, while investigations have also led to multibillion-dollar settlements in civil cases.
There are still lawsuits filed in the US and UK against some banks to recover damages on behalf of several investment managers.
The EU said there was another investigation involving Credit Suisse, regarding “an alleged infringement which may have taken place in another chatroom” but it declined to provide any further details on this case.
Lawyers for investors in the US civil case have been waiting for the ruling to launch the European leg of claims. David Scott, managing partner of Scott and Scott, the co-lead on the US class action claim, said European investors remained uncompensated.
“We’ve been waiting for this step before initiating a recovery action. Our firm will be working to recoup losses suffered by non-US pension funds, asset managers, insurance companies and multinational corporations, among others, as a result of the banks’ wrongdoing,” said Belinda Hollway, a Scott and Scott partner.