By Patricia Kowsmann in Frankfurt and Margot Patrick in London
European Union authorities on Thursday fined five global banks a total of EUR1.07 billion ($1.2 billion) for manipulating the foreign-currency market by exchanging sensitive information and trading plans through online chat rooms to gain financially.
Citigroup Inc., JPMorgan Chase & Co., Barclays PLC, Royal Bank of Scotland Group PLC and Japan's MUFG Bank Ltd. are paying between EUR69.7 million ($78.1 million) and EUR310.7 million under settlements with the European Commission. UBS Group AG, which in 2013 revealed the existence of two cartels formed by the banks, has received full immunity and avoided EUR285 million in fines, the commission said.
Citigroup, which is paying the top fine of EUR310.7 million, and Barclays declined to comment. An RBS spokesman said the fine is a reminder of how badly the bank "lost its way" in the past.
A JP Morgan spokesman said one former employee was involved in the case, adding "we have since made significant control improvements." A spokeswoman for MUFG said it had taken "a number of measures to prevent this occurring again."
The manipulation involved 11 currencies, including the euro, U.S. dollar and British pound, and took place between 2007 and 2013. It involved foreign exchange spot order transactions, which are executed on the same day at the prevailing exchange rate. The commission said individual traders at the five banks exchanged information in a way that allowed them to coordinate whether and when to sell and buy the currencies for their advantage.
Most of the traders knew each other outside work, the commission said, including by commuting by train into London. The chat rooms, with colorful names such as "Three Way Banana Split" and "Semi Grumpy Old Men, " were kept open on the traders' screens all day, and they would post regular updates on their trading activities, the commission said.
The European Commission is one of the last global authorities to impose a large fine over behavior in foreign exchange trading markets that first came to light in 2013 and takes the total tab paid by banks over $11 billion. The commission opened an investigation that year but its findings come years after banks settled similar allegations in the U.S. and U.K. The commission said it hasn't completed its work, though.
"The commission will continue pursuing other ongoing procedures concerning past conduct in the Forex spot trading market," it said. HSBC Holdings PLC earlier this year said it also had been asked by the European Commission for information around potential coordination in foreign-exchange options trading.
Write to Patricia Kowsmann at firstname.lastname@example.org and Margot Patrick at email@example.com