Forex-Rigging Fines Could Hit $41 Billion Globally

Banks could have to pay as much as $41 billion globally to settle probes into allegations traders rigged benchmarks in the currency markets,Citigroup Inc. (C) said today.

Deutsche Bank AG (DBK) is seen as probably the “most impacted” with a fine of as much as 5.1 billion euros ($6.5 billion), Citigroup analysts led by Kinner Lakhani calculated, estimating the Frankfurt-based bank’s settlements could reach 10 percent of its tangible book value, or its assets’ worth.

Using similar calculations, Barclays Plc (BARC) could face as much as 3 billion pounds ($4.8 billion) in fines and UBS AG (UBSN) penalties of 4.3 billion Swiss francs ($4.6 billion), they wrote in a note first sent to clients on Oct. 3.

Authorities around the world are scrutinizing allegations that dealers traded ahead of their clients and colluded to rig currency benchmarks. Regulators in the U.K. and U.S. could reach settlements with some banks as soon as next month, and prosecutors at the U.S. Department of Justice plans to charge one by the end of the year, people with knowledge of the matter have said.

Spokesmen for Deutsche Bank, Barclays and UBS declined to comment on the Citigroup estimates.

The Citigroup analysts made their calculations using a Sept. 26 Reuters report that the U.K. Financial Conduct Authority settlements could include fines totaling about 1.8 billion pounds. They derived their estimates for how high fines could go in other investigations from that baseline, using banks’ settlements in the London interbank offered rate manipulation cases as a guide.

“Extrapolating European and, more importantly, U.S. penalties from a previous global settlement suggests to us a total potential global settlement on this key issue,” they said in the note.

Cooperation Rewards

U.K. authorities will probably account about $6.7 billion of fines across all banks, according to the Citigroup analysts. Other European investigations will account for $6.5 billion. Penalties in the U.S. cases could be about four times greater, hitting $28.2 billion.

The Citigroup analysts didn’t take into account the possible effect of banks’ collaboration with investigators. That can have a big impact on the size of the fines, lowering and even wiping out a penalty in some cases.

UBS and Barclays saw $4.3 billion worth of antitrust fines waived by European Union authorities in December in exchange for their early and full cooperation. Six others were fined 1.7 billion euros in that case, which involved rigging euro and yen interest rate derivatives.

UBS has sought leniency in exchange for handing over evidence of misconduct to U.S. antitrust investigators in the foreign-exchange probes, and was also the first to step forward to cooperate with the EU, people with knowledge of the matter have said.

To contact the reporter on this story: Richard Partington in London at rpartington@bloomberg.net

To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net Heather Smith, Edward Evans

Source.

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One thought on “Forex-Rigging Fines Could Hit $41 Billion Globally

  1. jav30001@gmail.com says:

    Where does the fine money go to?ill tax payers actually be paying the find in the form of more taxes, since the so called debt is nothing more than money created on a computer, better kown as fiat money derived from an illegal fractional banking system where will the Banks get real assets (gold and silver) to pay the so called fine??? Or is all of this just another scam cooked up by the Rothschilds via the BIS, the central Bank of central banks who answers to no one, collects the finds and uses the fine money for more black opt projects? So really, who in the end pays the fine, the Banks or the working class Hero? Thanks, Rich

    Sent from my H

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