21 May 2015

Major banks hit by record fines

6:10 am on 21 May 2015

Some of the world's largest banks are to pay fines totalling $US5.7 billion for conspiring to manipulate the foreign exchange market.

Four of the banks - JPMorgan, Barclays, Citigroup and the Royal Bank of Scotland - have agreed to plead guilty to American criminal charges.

Foreign exchange rates displayed in a bank window.

Foreign exchange rates displayed in a bank window. Photo: AFP

The fifth, UBS, will plead guilty to rigging benchmark Libor interest rates.

The massive settlement addresses what regulators described as a brazen scheme by financial heavyweights to orchestrate trades in the $US5.3 trillion per day global foreign exchange market in ways that cheated clients and bolstered their own profits.

Traders from banks communicated with instant messages and in a chat room referred to as "the Cartel," regulators said.

The US Attorney General Loretta Lynch says almost every day for five years from 2007, currency traders used a private electronic chat room to manipulate exchange rates.

She said their actions harmed countless consumers, investors and institutions around the world.

The size of penalties on individual banks ranged from the hundreds of millions of dollars to $US2.4 billion for British bank Barclays, depending on a bank's involvement in the scheme and whether it had already settled with some of the agencies involved in the global investigation.

Barclays was fined the most as it did not join other banks in November to settle investigations by UK, US and Swiss regulators.

Barclays is also sacking eight employees involved in the scheme.

Seperately, a sixth bank, Bank of America, was fined $US205 million by the US Federal Reserve over its foreign exchange trading operations.


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