Zwane hails decision to prosecute banks
MINERAL Resources Minister Mosebenzi Zwane yesterday welcomed the decision by the Competition Commission to press ahead with the prosecution of nearly 20 local and international banks which are suspected of collusion in currency manipulation.
Zwane said the decision vindicated his views that the banks needed to be investigated for bias against certain clients.
“We trust that this matter will be speedily resolved, as it also directly affects the mining sector,” Zwane said. “Most significantly, it has a direct impact on our objective of radically transforming the mining sector, and increasing ownership by black people.”
Zwane’s comments followed claims that some of the implicated banks had approached the graft agency with information into the alleged rigging of the rand.
On Wednesday, the Competition Commission said it had recommended nearly 20 local and inter national banks be prosecuted.
Yesterday, the Competition Commission released its affidavit, claiming that the implicated banks, for a period of at least eight years, had colluded using a complex web of co-ordinating by posting fictitious bids and offers on the Reuters trading platfor m to create a false impression of oversupply of either the dollar or the rand.
The watchdog body said its inquiry centred on an instant messaging chat room called “ZAR Domination”, which was allegedly used by the banks to co-ordinate trading activities when giving quotes to customers who buy or sell currencies.
Among the implicated banks are Nomura Inter national, Standard Bank, Investec, Barclays’ local unit, Absa, HSBC, JP Morgan Chase, BNP Paribas, Bank of America Merrill Lynch, Standard New York Securities, Australia and New Zealand Banking Group, Standard Chartered Bank, Barclays Capital, Macquarie Bank, Credit Suisse Group, Commerzbank and Barclays Capital.
Reuters yesterday reported that Barclays and Citigroup had apparently approached the commission’s investigators with the information.
“Barclays and Citigroup offered to co-operate with the investigation,” one source said, adding that if the information they provided led to a successful prosecution of other members of the alleged banking cartel they could be exempted from any fine.
Barclays yesterday reiterated its statement made earlier in the week that it would co-operate with the regulators, while Citigroup, which has also said it is working with regulators, was not immediately available for comment.
Barclays and Citigroup were not included in the list of banks that the Competition Commission recommended should be fined. However, the body did name them as members of the alleged rigging group.
The revelation of the developments elicited an unusually stern rebuke from the National Treasury, which said it viewed the allegations in a very serious light.
Bank stocks also retreated following the allegations.
By 3.30pm yesterday, Nedbank shares were down 2.14%, Standard Bank was 1.52% lower, FirstRand retreated 1.43% and Barclays dropped 0.94%.
The Treasury said, if proved true, the claims would confirm the pervasiveness of unbridled greed within the ranks of the foreign exchange trading sections of banks, even after evidence that such behaviour had the potential to collapse national and global financial systems.
It said such actions would lead to immeasurable pain for ordinary people as evidenced by the deep recession of 2008-09, which was triggered by banks conducting their business recklessly.
“It should be noted that these allegations, if proved to be correct, point to poor market conduct practices at such offending institutions,” the Treasury said.