The European Commission has imposed a total fine of 1.07 billion euros on five banks – Barclays, Citigroup, HSBC, JPMorgan, MUFG and Royal Bank of Scotland (RBS) – for collusion in the foreign currency market.
The European Commission said that the operators in the banks involved formed two cartels, which altered the international currency market of eleven currencies, including the euro, the pound sterling, the Japanese yen, the Swiss franc, the US dollar, Canadian, New Zealand and Australian, and the Danish, Swedish and Norwegian crowns.
EU Competition Commissioner Margrethe Vestager said the Commission actions against the banks involved send a clear signal “that the Commission will not tolerate collusive behavior in any sector of the financial markets.”
The first cartel, called ” Banana Split for three”, involved stockbrokers from Barclays, RBS, Citigroup and JPMorgan, and operated between December 2007 and January 2013.
The second, dubbed “Essex Express” , brought together agents from Barclays, RBS and MUFG, between December 2009 and July 2012.
“Spot currency transactions are one of the largest markets in the world, valued in billions of euros per day, ” Vestager said.
“The behavior of these banks undermined the integrity of the sector at the expense of the European economy and consumers.”
At 310.8 million euros Citigroup received the largest fine, while Swiss bank UBS, which also participated in the cartels, escaped a fine because it revealed their existence to the European Commission.
The investigation, which took five years, determined that nine operators shared confidential information including details about their customers’ orders, purchases and sales spreads for specific transactions, their open risk positions and other details of current or planned business activities.
Allegations of widespread manipulation in the spot foreign exchange market were first published in 2013 following the Libor scandal in 2012, where it was discovered that operators had manipulated the setting of interbank lending rates.
Since then the US and British authorities have fined seven of the world’s leading banks a total of 10 billion dollars for trying to manipulate exchange rates.