Barclays fined record £1.5bn over forex fix but gains £1.5Bn market value


The banks pleaded guilty to rigging the $5.3 trillion-a-day global currency market for several years. On top of a $4.3 billion settlement last November, the fines take the total levied against foreign exchange rigging to nearly $10 billion, exceeding the $9 billion so far paid over Libor manipulation.

Barclays paid by far the biggest fines, handing over £1.5 billion to the regulators, including £284 million to the Financial Conduct Authority.

However the financial markets expected Barclays fine to be substantially greater, at around £2.4 billion, so the news actually saw the banks share price rise.

That price rise saw the peak hit a 3.5 per cent increase on early pricing which coincidentally resulted in the value boost adding £1.5 billion to the price of the Canary Wharf based bank.

The largest proportion of the penalties was levied by the US Department of Justice, which fined the banks more than $2.5 billion as part of a settlement deal that saw all but one of the lenders, UBS, plead guilty to criminal charges. None will face a criminal trial.

Documents released by the regulators echoed the findings of the investigation last year that highlighted how traders conspired to influence the value of twice-daily fixings of key currency pairings to enhance their profits.

Electronic chatroom conversations discovered by officials found traders forming their own groups to manipulate the market, some of which had nicknames such as “the players” and “the 3 musketeers”.
Barclays said that it would be firing eight employees in its deal with the DoJ, with one employee writing in an electronic message “markup is making sure you make the right decision on price . . . which is whats [sic] the worst price i can put on this where the customers decision to trade with me or give me future business doesn’t change . . . if you aint cheating, you aint trying”.

Antony Jenkins, Barclays chief, said: “The misconduct at the core of these investigations is wholly incompatible with Barclays’ purpose and values.”

Sir Philip Hampton, chairman of RBS, said that the new findings exposed serious shortcomings at the taxpayer-backed lender. Taking the fines it paid in November, forex penalties have now cost RBS more than $1.2 billion. More than 50 of the bank’s staff have been caught up in the investigation.