Barclays breaking ranks on forex fine
BARCLAYS has taken a multi-million-pound bet on reaching a deal with global regulators over its rigging of the foreign exchange market.
The bank, led by chief executive Antony Jenkins, broke ranks with six of its biggest competitors, which yesterday agreed a £2.6bn settlement with UK and US regulators.
His decision to opt out of the collective agreement came as City watchdogs made clear they expect banks to claw back bonuses from those responsible.
The Financial Conduct Authority (FCA) is also looking at whether it can take action against senior staff if it is proved they failed to supervise forex operations adequately.
Chancellor George Osborne and his Labour opposite number Ed Balls briefly set aside their differences to demand that the banks look at seizing bonus awards from those implicated in the affair.
Barclays needs to reach an agreement with six regulators worldwide in the forex scandal, where traders are accused of manipulating the £3trillion-a-day market.
The UK lender is understood to fear the bad publicity involved if it has to reach a string of separate settlements, with bad news being drip-fed to the market. It has decided to try to settle its forex problems in two or three deals with the regulators.
But its decision to opt out of yesterday’s arrangement means it has foregone a multi-million-pound discount for prompt payment.
Five rivals – Royal Bank of Scotland, HSBC, UBS, Citibank and JP Morgan Chase – have received a collective £490m money-off bargain from the FCA. The sum is equivalent to 30pc of their total fine. They were still hit for a total of £1.1bn, the largest penalty ever imposed by the UK regulator.
In a separate j udgment, US watchdog the Office Of The Comptroller Of The Currency (OCC) fined JP Morgan, Citigroup and Bank of America £600m for rigging foreign exchange markets.
Bank of America was fined more than £150m.
Barclays is still smarting from the £290m fine it suffered in the Libor scandal, when it agreed a penalty ahead of its peers.
Sources denied the affair, which claimed the scalp of former chief executive Bob Diamond, had influenced its behaviour over the forex fines. The bank still hopes to negotiate a 10pc or 20pc discount.
Barclays said it has engaged constructively with regulators and that it considered joining in ‘on closely similar terms’ to those announced yesterday, but added that it decided it is in its interests ‘to seek a more general co- ordinated settlement’.
Barclays may have pulled out because of issues with the New York Department of Financial Services ( DFS), according to reports. The DFS is run by Benjamin Lawsky, the hardline regulator who threatened to revoke Standard Chartered’s licence over sanctions-busting.
The lenders yesterday faced calls from Chancellor George Osborne to claw back bonuses from those responsible. ‘All the banks involved will want to take a serious look at their bonuses as a result of these fines,’ Osborne said.
He said banks ‘need to reflect on very justified public anger’.
Ed Balls, the shadow chancellor, added: ‘We need reforms to pay and bonuses, with more transparency, greater clawback and a tax on bank bonuses.’
Margaret Cole, FCA’s director of enforcement and financial crime, said that she expects the banks to take account of the episode when working out bonuses.
Cole said the FCA will look at whether it can act against senior staff, adding: ‘In this case we’re not typically looking at direct involvement in committing fraud – the question is if they had adequate oversight of their business.’
Bank insiders say they would try to claw back bonuses from those staff involved.
Yesterday, Barclays shares fell 5.1p to 229.5p.