Barclays agree to pay huge fine after rigging of global currency markets

Barclays has agreed a �1.53 billion fine with US and UK authorities amid a raft of new settlements with banks over their involvement in the rigging of global currency markets in the latest scandal to engulf the industry. Picture: (PA Wire)
Barclays has agreed a �1.53 billion fine with US and UK authorities amid a raft of new settlements with banks over their involvement in the rigging of global currency markets in the latest scandal to engulf the industry. Picture: (PA Wire)
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Barclays has agreed a £1.53 billion fine with US and UK authorities amid a raft of new settlements with banks over their involvement in the rigging of global currency markets in the latest scandal to engulf the industry.

The British banking giant’s penalty includes a record £284.4 million to the UK’s Financial Conduct Authority and the group pleaded guilty to a violation of US anti-trust law.

Royal Bank of Scotland was among four other banks also hit with penalties, agreeing to pay a further 669 million US dollars (£430 million) to US authorities, which comes on top of a £399 million penalty last November, including £217 million by the FCA and 290 million US dollars (£186 million) by the US Commodity Futures Trading Commission (CFTC).

Alongside Barclays and RBS, US banks JP Morgan Chase & Co and Citigroup as well as Swiss bank UBS have been fined a total of 5.6 billion US dollars (£3.7 billion) for their role in the forex scandal.

The Financial Conduct Authority (FCA) imposed its highest ever penalty against Barclays for failing to control business practices in its foreign exchange (FX) business in London.

Its settlement is greater than the other banks as it held off from agreeing fines in the previous round announced in November.

Georgina Philippou, the FCA’s acting director of enforcement and market oversight, said: “This is another example of a firm allowing unacceptable practices to flourish on the trading floor.

“Instead of addressing the obvious risks associated with its business Barclays allowed a culture to develop which put the firm’s interests ahead of those of its clients and which undermined the reputation and integrity of the UK financial system.”

The FCA said its fine would have been 20% higher - at £335.5 million - if Barclays had not settled when it did.

Four of the banks involved in the US and UK settlements - JP Morgan, Barclays, Royal Bank of Scotland Group and Citigroup will plead guilty to conspiring to manipulate the price of US dollars and euros.

A spokesman for the Treasury said: “The Government created the tough new Financial Conduct Authority (FCA) and gave it strong powers to take action wherever its rules are breached.

“The action taken on foreign exchange failings today, and in November last year, shows that the new, tougher regulatory system is working.”

The FCA said that traders colluded with each other through chat rooms to rig rates, using swashbuckling names such as “the three musketeers”, with one banker saying “we all die together”.

US regulators said that Barclays had terminated four employees - three in London and one in New York - this month and urged the bank to fire four more who are currently based in New York.

Antony Jenkins, chief executive at Barclays, apologised for the bank’s role in the scandal.

He said: “The misconduct at the core of these investigations is wholly incompatible with Barclays’ purpose and values and we deeply regret that it occurred.”

He added: “I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute.

“Dealing with these issues, including taking the appropriate disciplinary action against the individuals involved, is a necessary and important part of our plan to transform Barclays and remains a key priority.”

As well as the FCA, Barclays has now settled with US authorities including the Department of Justice (DoJ) and Commodities Future Trading Commission (CFTC).

The forex market is one of the largest markets in the world with a daily turnover of more than £3 trillion, 40% of which takes place in London.

Asked for David Cameron’s response to the fines, a Downing Street spokeswoman said: “The Prime Minister and the Chancellor have been clear on the action that was needed to make sure action was taken where rules were breached, that the integrity of the City of London and how banks act matters to the economy and reputation of Britain.

“That’s why the Financial Conduct Authority was set up.”