Five big banks face criminal charges and $5 billion bill over FX rigging
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.
Britain's Financial Conduct Authority and some U.S. authorities fined a group of six banks $4.3 billion in November for forex manipulation, but Barclays did not join that deal due to complications with its regulator in New York.
The impact of guilty pleas by the parent companies or main banking arms of major banks is uncertain, and could jeopardize their U.S. operations.
The banks are seeking assurances from U.S. regulators they will not be barred from certain businesses if they plead guilty, several sources familiar with situation said.
The DoJ has been negotiating with the banks for months over how to resolve the forex allegations. Transcripts of online chat rooms made public in November showed how traders shared confidential information about client orders and otherwise conspired to benefit their own transactions.
The timing of a settlement could still slip if there is a last minute hitch.
Some authorities will continue to look at whether computer programs used in trading platforms could have rigged forex prices, which is likely to be excluded from Wednesday's deal.
(By Reuters reporters in London, Zurich, New York and Washington, D.C. Editing by Jane Merriman)