British banks pay price for forex scandal

INVESTORS in the US have secured £1.3bn in settlements from nine banks for the foreign exchange rigging scandal.

Royal Bank of Scotland, Barclays and HSBC are among the latest lenders to reach a settlement in class action lawsuits, lawyer Christopher Burke said in a federal court in Manhattan. Others are French lender BNP Paribas, Bank of America, JP Morgan, Citibank and UBS.

The investors involved in the lawsuit include hedge funds and pension funds which have accused the banks of impeding competition by conspiring to manipulate the £3.5trillion a day forex market.

Traders used chatrooms with names such as the ‘The cartel’, ‘The Mafia’ and ‘The Bandits’ Club’ to communicate with each other.

Burke, who is representing the investors, said after the hearing: ‘We look forward if necessary to litigating through trial.’

Michael Hausfeld, Burke’s co-counsel, said that he is in talks about bringing cases overseas related to forex manipulation in Europe and Asia.

UK and US regulators have already fined lenders more than £6bn for the scandal.

This includes a £2.6bn settlement for six banks in November and a record £3.7bn in May. Banks have been forced to make huge provisions to cover the spiralling bill from lawsuits. Barclays has set aside more than £2bn for the scandal and has around £400m left to cover litigation costs after its fines.

HSBC revealed earlier this month that it had put aside more than £900m for fines and litigation in the first half of the year – including a fresh £500m for the forex scandal. It has already been hit with a £216m fine by the Financial Conduct Authority and a £176m penalty from the US Commodity Futures Trading Commission.

But it faces more settlements in America, with the Department of Justice launching a criminal probe.