Settlement reached following probe
Banks fined £4 billion after admitting guilt in forex scandal
Royal Bank of Scotland and Barclays were among four banks which today pleaded guilty to trying to manipulate foreign exchange rates, and together with two others were fined a total of almost $6 billion (£4n).
The settlement with US authorities effectively brings an end to one of the world’s biggest ever misconduct investigations.
In total seven banks have paid $10bn in fines for the practices of forex traders between 2007 and 2013.
Citigroup and JP Morgan also pled guilty today. Swiss bank UBS, which avoided a guilty plea over the forex debacle, pleaded guilty instead to one count of wire fraud and will pay a $203 million fine for its role in rigging Libor. Switzerland’s largest bank will also pay $342m to the Federal Reserve over attempted manipulation of forex rates. The US central bank also find Bank of America $205m.
Barclays was hit with the biggest fine today with a penalty of $2.4bn (£1.53bn). It had set aside $3.2bn to cover any forex related settlement.
Antony Jenkins, Barclays chief executive, said: “The misconduct at the core of these investigations is wholly incompatible with Barclays’ purpose and values and we deeply regret that it occurred. This demonstrates again the importance of our continuing work to build a values-based culture and strengthen our control environment. We remain completely committed to that effort.
“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.”
RBS is charged with participating in the conspiracy from as early as December 2007 until at least April 2010. The plea agreement is subject to approval of the federal court in Connecticut that is presiding over the matter.
RBS will pay penalties of $395m to the DoJ and $274m to the Federal Reserve to resolve the investigations. As previously disclosed, RBS remains in discussions with governmental and regulatory authorities in other jurisdictions in relation to conduct within its FX business.
In addition, RBS and RBS Securities Inc. have reached an agreement to settle the consolidated antitrust class action brought on behalf of plaintiffs who entered into FX transactions with RBS or other defendant banks.
The agreement is subject to execution of a final settlement agreement and approval of the federal court in New York that is presiding over the matter.
Philip Hampton, RBS Chairman, said: “The RBS Board fully accepts the conclusions of today’s resolutions. We strongly condemn the actions of those responsible and regret the control failings that allowed such misconduct to take place.
“This episode has exposed serious shortcomings at both individual and collective levels from which we continue to learn. As part of this effort we are committed to implementing further improvements to systems and controls.
“We are continuing thorough investigations into the conduct of employees in this part of the business. As a result, we have dismissed three people and suspended two more pending further investigation. This work is on-going and will take into account the findings contained in these settlements.”
Ross McEwan, RBS chief executive, added: “The serious misconduct that lies at the heart of today’s announcements has no place in the bank that I am building. Pleading guilty for such wrongdoing is another stark reminder of how badly this bank lost its way and how important it is for us to regain trust.
“To regain that trust we are putting the interests of our customers at the heart of this business and its culture. It has taken far longer than anyone hoped to root out all the past conduct problems and practices and as a result we still have significant challenges on the horizon.
“We are determined to learn the lessons from our past mistakes and to hold those responsible fully to account for their actions.”
RBS said it had fully cooperated with regulators throughout the process. Since becoming aware of failings in the controls over parts of its FX business and improper conduct, RBS management has taken action to significantly improve culture, systems and controls.
RBS’s senior management has implemented a stronger governance and control framework within its Corporate and Institutional Banking division.
The bank said it continues to undertake a thorough review of the conduct of current and former employees in its FX business within its Corporate and Institutional Banking division.
The investigation has so far resulted in the dismissal of three employees with a further two suspended pending further investigation. When taking accountability decisions, RBS is also continuing to review the actions and responsibilities of the managers of the FX business and the Corporate and Institutional Banking division during the relevant period.
It said today’s announcements will be taken into account in the on-going accountability and disciplinary process.
“In addition, the Group Performance and Remuneration Committee and senior management will take today’s announcements into consideration in relation to future remuneration decisions.”