12 November 2014

Reuters: Regulators fine global banks $3.4 billion in forex probe

Switzerland's UBS swallowed the biggest penalty, paying $661 million to Britain's Financial Services Authority (FCA) and the U.S. Commodity Futures Trading Commission (CFTC) and ordered by the Swiss regulator FINMA to hand over 134 million Swiss francs.

FINMA also ordered Switzerland's largest bank to automate at least 95 percent of its global foreign exchange trading and limit bonuses for traders of foreign exchange and precious metals, where it said it had also found evidence of serious misconduct, to 200 percent of their base salary for two years.

Other bank employees who earn more than 200 percent of their base salary in bonuses will have to undergo an approval process.

FINMA has started enforcement proceedings against 11 former and current employees of UBS.

Barclays, a major player in the foreign exchange market, had been expected to be part of the settlement but the FCA said its investigation into the UK bank was continuing.

The UK regulator's first group settlement, worth more than $1.7 billion, eclipses the 460 million pounds it has so far fined the industry for alleged interest rate manipulation, reflecting increasing political and public demands that banks -- blamed for sparking the 2008 credit crisis -- are held accountable and culpable for misconduct.

Full article on Reuters

Financial Times: Why shareholders should share the bank pain over fines

Another day, another multibillion-dollar clutch of fines to punish banks’ past wrongdoing. This time the $4.3bn bill levied on six global banks relates to foreign exchange trading abuses – and there will be more. Extra money will be extracted from other banks by additional regulators.

The banks themselves are grimly accepting, if not downright humble. Even now more than six years after the financial crisis, they are mindful of the misguided tone of Bob Diamond’s flip remark of 2011, when the former Barclays boss told a parliamentary committee: “There was a period of remorse and apology for banks and I think that period needs to be over.”

But banks’ shareholders are getting increasingly cross about the campaign of punishment by regulators. It is a common refrain: why should today’s shareholders suffer because the misdemeanours of a few dozen individuals many years ago? The first online commenter on the FT’s early morning report of the forex settlement wrote: “Fines hit shareholders not those who have done wrong.”

Full article Financial Times (subscription required)

© Reuters