They’ve had dark days before, but surely none more gloomy than this. 5 of the world’s biggest banks fined a collective 5.7 billion dollars. UBS, RBS, Barclays, Citigroup, and JP Morgan all reaching settlements with US and UK authorities to end a probe into alleged currency market manipulation.
UBS was the first to settle. Taking a 545 million-dollar hit, which also covers a penalty for the Libor scandal. For investors though this was actually good news, having expected a much bigger fine.
UBS’s shares rising more than 3 percent to their highest level in six and a half years.
Reputations all round in fact surprisingly in tact, says IG’s Alastair McCaig.
“The markets and investors have, to a certain extent, got a touch of snow-blindness due to the volume of historical action that has been taken against institutional banks. And at this latter stage it’s debatable how much reputational damage is going to continue to be done.”
Barclays faces the biggest fine, almost 2 billion dollars alone.
The greater worry though could be the pending criminal charges in the U.S. While UBS was let-off for flagging up the misconduct – the other banks all had to plead guilty to one felony count each conspiring to fix prices and rig bids in the FX market.
Reuters banking editor Steve Slater says, “It could put restrictions on their US operations, it could mean they can’t do some areas of business, and the banks have been very keen to make sure they get waivers to make sure that they’re not punished too heavily by these criminal charges.”
The scandal has also cast a shadow over London. The city accounts for 40 percent of global currency trading and regulators will be keen to turn over a new leaf. For the banks though, that may be a lot harder. South African authorities the latest to join the global investigation earlier this week.
Ventuno/Reuters