50 RBS forex traders facing internal probe after £400m fine
Royal Bank of Scotland chairman Sir Philip Hampton and chief executive Ross McEwan expressed their anger today at the behaviour of staff involved in the foreign exchange scandal which has led to another big fine for the bank.
More than 50 employees and former employees and dozens of others are being investigated over the affair which led to five banks being fined some £2 billion. McEwan promised that those involved will be dealt with through clawback, awards forfeiture or disciplinary procedures.
“There is no place for this conduct at RBS,” he said in an early morning conference call, adding that it was a “setback in our efforts to win back the trust of our customers.”
McEwan said that to say he was angry was “an understatement”. He said: “We had people working in this bank who did not know the difference between right and wrong and put their interests ahead of clients.”
He said he operated a policy of zero tolerance.
Hampton “condemned the actions of those employees” involved in the scandal. Also penalised were HSBC, Swiss bank UBS, and US banks JP Morgan Chase and Citibank.
The UK’s Financial Conduct Authority and the US Commodity Futures Trading Commission accused the banks of failing to control their practices. Barclays is subject to a separate hearing while the Swiss regulator FINMA handed out a 134m Swiss francs penalty on UBS.
The five hit today were issued with a £1.1bn fine from the FCA and a further $1.4bn (£878m) by the CFTC.
RBS has agreed to pay penalties of £217m to the FCA and $290 (£182m) to the CFTC to resolve the investigations. These penalties are covered by the £400m provision recorded in the Q3 2014 results as previously disclosed.
Hampton said in a statement: “The RBS Board fully accepts the criticisms within today’s announcements and condemns the actions of those employees responsible for this misconduct. 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.
“We take these criticisms extremely seriously and are acting to ensure that our employees adhere to the highest standards and that our systems and controls are fit for purpose. We are continuing thorough investigations into the conduct of all employees who were involved in this part of the business.
“We have analysed millions of documents and are reviewing the conduct of over 50 current and former members of trading staff around the world as well as dozens of supervisors and senior management responsible and accountable for this business. As part of that process, we have already placed six individuals into a disciplinary process, three of whom are currently suspended, pending further investigation. We will make a public statement before the end of the year on the progress of the conduct investigation.”
FCA chief executive Martin Wheatley, said: “Today’s fine marks the gravity of the failings we found and firms need to take responsibility for putting it right. They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about,” said.
The failings occurred between 1 January 2008 and 15 October 2013, the FCA found.
The FCA said the banks had not “exercised adequate and effective control” over their foreign exchange trading businesses, training was “insufficient” and that the “right values and cultures” were not sufficiently embedded in the banks’ foreign exchange businesses.