THE Royal Bank of Scotland is among five of the world’s biggest banks fined a total of £2 billion today after regulators today lifted the lid on the latest scandal to rock the finance industry.
The penalties relate to the rigging of the £3 trillion-a-day foreign exchange markets, adding to the large sums already collected over Libor fixing.
Edinburgh-based RBS was fined £217 million by the UK Financial Conduct Authority (FCA) as well as £182m by the US Commodity Futures Trading Commission (CFTC).
The others involved in the settlement are Citibank, HSBC, JPMorgan Chase and UBS. Barclays said it continues to hold discussions with regulators.
The FCA penalties dwarf the £532m imposed by the regulator on banks and City brokers over the previous big regulatory scandal involving the manipulation of the interbank lending rate, Libor.
The FCA said traders at different banks formed tight-knit groups in which information was shared about client activity, including using code names to identify clients without naming them.
Names given to these groups included “the players”, “the 3 musketeers”, “1 team, 1 dream”, “a co-operative” and “the A-team”. Traders shared the information obtained through these groups to help them work out their trading strategies.
The banks, rather than being complicit in this activity, “did not exercise adequate and effective control” between 2008 and 2013. But the regulator said the banks’ failings had undermined confidence in the financial system.
Today’s fines by the FCA, totalling £1.1bn, are the largest ever imposed by the watchdog.
FCA chief executive Martin Wheatley said: “Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right.
“They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about.”
RBS said it had placed six individuals into a disciplinary process, three of whom were currently suspended, pending further investigation.
It said it had analysed millions of documents and was reviewing the conduct of more than 50 current and former members of trading staff around the world, as well as dozens of supervisors and senior management.
RBS chairman Sir Philip Hampton said: “The RBS board fully accepts the criticisms within today’s announcements and condemns the actions of those employees responsible for this misconduct.
“Today is a stark reminder of the importance of culture and integrity in banking and we will rightly be judged on the strength of our response.”