While it had been expected, the tally of fines levied by UK and US regulators on five major banks this week - for their part in rigging the foreign exchange (FX) market - is unlikely to be the end of the affair.
Specifically, the UK's Financial Conduct Authority (FCA) and America's Commodity Futures Trading Commission (CFTC) have stung HSBC (HSBA), RBS (RBS), UBS (CH: UBSN), Citigroup (US: C) and JP Morgan (US: JPM) with fines totalling £2.7bn. Of the UK banks, HSBC was hit with combined fines of £389m while RBS’ tally reached £400m.
Significantly, Barclays (BARC) - which is certainly in line for FX-related fines - decided not to take part in this round of announcements. It reckons that it's "in the interests of the company to seek a more general coordinated settlement" - to reflect the fact that fines from other agencies, not just in the UK and US, are also on the cards. "We believe that makes sense," says banking analyst Ian Gordon of broker Investec Securities. That, he says, is preferable to being "picked off by the regulators one by one".
Barclays' point, of course, is also relevant for those lenders that have announced details of their US and UK fines. The £400m FX-rigging provision that RBS set aside at the third quarter stage, for instance, only covers these latest fines yet the bank notes that it's in discussions with "other" governmental and regulatory bodies. These include the US Department of Justice (DoJ) and "certain other financial regulatory authorities". Meanwhile, HSBC was clear that the FX-rigging provision it set aside at the third quarter stage was only to cover UK fines. Barclays has in the past mentioned a long list of other agencies that it's in discussions with, including the Hong Kong Monetary Authority, the SEC, the DoJ and the New York regulators.
Indeed, analysts at Macquarie Securities have estimated that the UK's banks could eventually pay out fines for FX manipulation that total $11.5bn (£7.2bn). That comprises $3.5bn fines for HSBC, Barclays and RBS, as well as $1bn for Lloyds (LLOY).
