Five big banks face criminal charges and $5 billion bill over FX rigging

Tue May 19, 2015 7:04pm EDT
 
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LONDON/NEW YORK (Reuters) - Five of the world's biggest banks are expected to be hit with a combined bill of more than $5 billion and criminal charges on Wednesday in a settlement with U.S. and British authorities over rigging of currency markets.

It will mark another dark day for an industry trying to put past sins behind it and brings the total in penalties some big banks will pay for their traders allegedly manipulating the $5-trillion-a-day foreign exchange market to about $10 billion.

U.S. banks JPMorgan and Citigroup and Britain's Barclays and Royal Bank of Scotland are expected to plead guilty to criminal charges with the U.S. Department of Justice related to forex manipulation, people familiar with the matter said.

It would be unprecedented for the parent companies or main banking arms of so many major banks to plead guilty to criminal charges in a coordinated action. JPMorgan and Citigroup would be the first major U.S. banks to plead guilty to criminal charges in decades.

Swiss bank UBS is expected to avoid a criminal charge after getting immunity for alerting authorities to a possible problem. But it faces a criminal charge over the rigging of benchmark (Libor) interest rates, two people familiar with the matter said.

That stems from an agreement with the DoJ in its December 2012 Libor settlement not to commit more offences. It will also pay a $200 million fine, the two sources said.

Barclays is also expected to reach settlements with other British and U.S. regulators, which means its penalties could be significantly higher than the other banks and top $2 billion.

Barclays has set aside $3.2 billion to cover any forex fines, and other banks also have provisions for settlements.

Individuals at Barclays could also be held accountable if there is evidence of bad conduct, New York's banking regulator Benjamin Lawsky told Reuters on Tuesday, echoing a warning he made last week.   Continued...

 
People walk inside JP Morgan headquarters in New York, October 25, 2013.  REUTERS/Eduardo Munoz