In Depth

Barclays, RBS and HSBC agree $1bn forex fixing settlement

Banks could face legal actions in London worth billions of pounds

Barclays, Royal Bank of Scotland and HSBC have agreed to pay $924m (£600m) to settle US investor claims related to the fixing of global foreign exchange markets.

The three British banking giants are among nine major international institutions which earlier this summer agreed to pay a combined $2bn in order to settle a class action lawsuit brought on behalf of institutional investors such as pension funds. Investors claim they lost out as a result of attempts by the big banks to rig the foreign exchange markets. The banks have admitted their guilt, resulting in regulatory penalties last year of around £2bn.

During a US federal court hearing yesterday, Barclays, RBS and HSBC agreed specific settlements of $384m, $285m and $255m respectively, people familiar with the matter told Sky News. The French bank BNP Paribas and the Wall Street giant Goldman Sachs also agreed to pay $249m between them.

A number of global regulators are still conducting investigations into the global banks' misconduct and a probe by the Serious Fraud Office in the UK is currently ongoing. This means the big banks could yet face further fines.

Further investor lawsuits are also likely. The Daily Telegraph reports that Scott+Scott, one of the law firms that brought the US 'class action' case, is gearing up to launch a similar action in London on behalf of European investors. As the forex market in the British capital is the largest in the world, the damages claimed could be even higher.

"Compensation figures today should serve as an indication of the scale of the potential European action as the UK market is almost double the size of that in the US," said David R Scott, the firm's managing partner.

As part of the US settlement, the banks have also agreed to provide Scott+Scott with "descriptions of their actions, documents, witness interviews, depositions and trial testimony" as well as to "offer 'extensive' cooperation against lenders that have yet to settle similar claims."

Forex rigging: Barclays, RBS and HSBC facing billions in legal claims

18 August

Nine global banking groups, including three of the UK's largest high street lenders, Barclays, Royal Bank of Scotland and HSBC, are facing billions of pounds of fresh legal claims after a landmark settlement in New York last week.

On Friday, the banks agreed to pay a combined $2bn (£1.3bn) to settle a claim brought on behalf of a number of investors for losses caused by the rigging of foreign exchange markets, The Guardian reports. Alongside the UK groups included in the action were big-name international brands Goldman Sachs, Bank of America, Citigroup and JP Morgan, as well as European peers BNP Paribas and UBS.

Transatlantic law firm Hausfeld, which acted for the investors, said the settlement was "just the beginning". As the case was a 'class action', Anthony Maton, a managing partner at the firm's London office, said it would benefit other investors in America.

But he said that while there is "no doubt" those who traded in the British capital will also have suffered losses, there would "need to be concerted action in London" for them to get compensation.

That action may be forthcoming. Lawyers working on cases have told the Financial Times that claims could be brought in the High Court as early as this autumn and these could rapidly escalate the potential bill. David McIlroy, a barrister at Forum Chambers, said there would be "more claims in London than in New York because it’s a bigger Forex market" and that a settlement could amount to "tens of billions of pounds".

The UK banks have all put in place provisions for settling claims relating to past wrongdoing, but may have to put aside more if the scale of redress claims is as high as some are suggesting. RBS, for example, revealed in its results last month  it had set aside £1.3bn during the first half of 2015 to cover all ongoing legal action.

Last year, RBS was one of five of the nine banks included in this settlement to pay a collective £2bn to settle investigations by British and American regulators into Forex market manipulation. The bank was thought to have shelled out £399m to cover its share of the fines.

Five banks fined £2bn by regulators for forex fixing

12 November 2014

UK and US financial regulators have together fined five banks a total of £2bn for fixing foreign exchange rates. The £1.1bn fine meted out by Britain's Financial Conduct Authority (FCA) is the largest ever imposed in the country.

The five banks fined are HSBC, Royal Bank of Scotland, UBS, JP Morgan Chase and Citibank. A further probe into the activities of Barclays bank is ongoing.

The penalties come after a year-long investigation into alleged rate-rigging, says City AM. Announcing them, the FCA said the banks' actions had undermined confidence in the UK's financial system and "put its integrity at risk".

The banks have officially been fined for "failing to control business practices" in their foreign exchange operations, where traders were found to have coordinated their deals with corrupt rivals at other banks in an attempt to manipulate benchmark rates.

US regulator the Commodity Futures Trading Commission (CFTC) said the traders had used private online chat rooms to communicate with each other, the BBC reports. The FCA said the banks had not inculcated the "right values and cultures".

UK chancellor George Osborne said that the fines were part of a "long term plan that is fixing what went wrong in Britain's banks and our economy" which would restore world confidence in the "integrity of Britain's financial markets". Some 40 per cent of world trades are thought to go through London.

While all the fines are aimed at banks, rather than individuals, some banks said they have disciplined employees involved in the breaches. Royal Bank of Scotland said it had placed six people into a disciplinary process and suspended three while it investigated the allegations.

HSBC said it plans to "take whatever action is appropriate". UBS said it had already taken "appropriate disciplinary action". JP Morgan merely promised "significant improvements" and Citigroup said it had "acted quickly" to improve systems.

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