Outlook: Foreign-exchange market inquiry has the City worried

Outlook The behaviour of GRG isn't the only problem faced by RBS. There is also the ongoing investigation into the foreign-exchange market, although RBS is by no means alone there. It's not even among the four biggest players.

Right now this is the one that is really worrying the City because there is a real feeling that it will lead to something nasty coming out in the wash.

Remember all those Libor e-mails? We may yet see a repeat performance.

But the e-mails, while entertaining in a grotesque sort of way, may be the least of the banks' worries. Which is why a number have acted very quickly, suspending traders, and providing the watchdogs with fulsome co-operation. It's called damage limitation.

If and when the hammer falls, they will duly issue statements highlighting this co-operation and pointing to it being noted by the regulators.

If this goes to form, those statements will also contain crocodile tears of regret and pious statements about how what the regulators have found does not reflect the wider culture of the bank.

Is that bit really true though?

There is a reason why traders behave the way they do. They are asked to work long hours under appalling pressure. They also know full well that they are utterly expendable. And if any problems arise they'll be thrown to the wolves. So it's in their interests to make as much money as they can as quickly as they can, by whatever means.

I'm not excusing traders' conduct. But given that the people who create and oversee the environment in which they work consistently fail to take any responsibility for it, it is understandable.