Large American and European banks are nearing settlement deals with British regulators over rigging interest rates and manipulating the foreign exchange market, sources told AFP Tuesday. The overall settlement for charges of illegally manipulating the London Interbank Offered Rate (Libor) would be billions of dollars. The scale of penalties is similar in the talks over manipulation of forex rates, said people familiar with the matter.
Britain's Financial Conduct Authority is holding talks with British bank Barclays, Deutsche Bank and US banks J.P. Morgan Chase, Citigroup, Bank of America and Bank of New York Mellon on the Libor manipulation issue. That settlement could come in the next few weeks, with banks paying penalties corresponding to their share of the market, sources said.
Some banks could end up paying only a few hundred million dollars. Libor, the rate banks charge each other for short-term loans, underpins an estimated $300 trillion of transactions worldwide. Leading banks, including Barclays, Lloyds, Deutsche Bank and UBS, have previously paid fines totalling billions of dollars in the US, Britain and the European Union.
On Tuesday, officials with Britain's Serious Fraud Office said a senior banker pleaded guilty before a London court to fraud linked to Libor in the first criminal conviction arising from the case. In the foreign exchange case, British regulators are in talks with Citigroup, J.P. Morgan, UBS, Barclays, RBS and HSBC to settle allegations the banks conspired to manipulate currency trades, people familiar with the matter said.
Regulators are probing whether currency traders from the banks used online chat forums and instant messages for manipulating a market with some $5.3 trillion in transactions per day. Citigroup is expected to pay the highest fine, according to sources. Citigroup declined comment. Banks involved in the foreign exchange settlement talks have suspended or fired traders in the wake of probes launched by multiple regulators.
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