The City watchdog is closing in on a deal that will see six banks paying around £1.5bn in fines over the role played by some of their traders in trying to fix London’s £3trn-a-day foreign exchange market.
City sources say the six remain locked in talks with the Financial Conduct Authority over a deal that could settle the UK end of what has become a multinational investigation. However an agreement could be reached this week, although next week is more likely.
By settling at this stage banks will qualify for a 30 per cent discount on fines.handed to firms that settle disciplinary cases early.
The FCA has been pushing for such a “grand settlement”, involving six banks settling at the same time, in an attempt to avoid the sort of firestorm that engulfed Barclays over the Libor interest rate fixing scandal.
Barclays ultimately paid £290m in fines to regulators on both sides of the Atlantic, which was one of the smallest fines paid by the banks involved. UBS, by contrast, paid nearly £1bn.
However, in part due to the series of graphic emails published in which traders pledged gifts of champagne and other inducements to those making the bank’s Libor submissions in return for their helping their trading positions, it became engulfed in a controversy that saw the bank losing its chairman, Marcus Agius, and chief executive, Bob Diamond, in a matter of days.
Watchdogs want to avoid creating such “first mover disadvantage” this time around.
There are also concerns about the unplanned departure of such senior figures in such a short timescale at a time of unprecedented regulatory change.
Barclays last week set aside £500m to cover forex-related fines, while Royal Bank of Scotland provisioned £400m and HSBC £236m.
All of these are expected to be little more than “down payments” on the final bill, with HSBC notably saying that its contacts have largely been with UK watchdogs as opposed to those in the US.
The US situation is complicated by the multiple agencies involved in investigating the case, and the propensity of the authorities there to levy penalties that dwarf anything that would be considered in the UK.
Neither the banks nor the FCA have been prepared to comment on the affair while talks are ongoing and banks have privately cautioned that one or more could still choose to fight the case.Reuse content