Yahoo Finance Barclays and RBS among banks fined £935m by European Commission
Barclays (BARC.L), Royal Bank of Scotland (RBS), Citigroup (C), and JPMorgan (JPM) are among several banks that have been fined €1.07bn (£935m) by the European Commission for colluding on currency foreign exchange trading strategies.
At €311m, Citigroup’s fine was the largest, followed by fines of €249m for RBS, €229m for JPMorgan, and €210m for Barclays. Japan’s MUFG Bank was fined almost €70m.
An investigation by the commission found that some individual traders in the banks — who were meant to be direct competitors — “exchanged sensitive information and trading plans” and “occasionally coordinated their trading strategies” in chatrooms.
In the chatrooms, the traders rigged the market by exchanging commercially sensitive information in relation to outstanding customer orders and the prices applicable to specific transactions, among other details.
These information exchanges “enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when,” the commission said.
Most of the traders involved knew each other on a personal basis, the commission noted. One chatroom was called the “Essex Express ‘n the Jimmy” because all but one of the traders, James, lived in Essex and met on a train to London.
Other chatroom names included the “Three way banana split” and “Two and a half men.”
The traders had “extensive conversations” on Bloomberg terminal chatrooms for the whole working day, the commission found.
The commission found that this amounted to collusive behaviour and was thus illegal, since transactions are supposed to be executed on the same day and at the prevailing exchange rate.
Billions of euros worth of foreign exchange spot trades, which see two parties agree to buy one currency against another currency for a given price, happen every day.
The fines were made following two separate rulings by the commission. UBS, which also participated in the collusive behaviour, was not fined because it revealed the existence of the cartels to the commission.
“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,” competition commissioner Margrethe Vestager said in a statement.
“The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”
Because Barclays, RBS, Citigroup, and JPMorgan all received reduced fines for their cooperation with the investigation, they will not be able to appeal the commission’s ruling.
