Banks face soaring bill over forex

BRITISH banks could face billions of pounds of civil claims over the rigging of the ‘wild west’ foreign exchange markets following a landmark court case in New York.

Barclays, HSBC and Royal Bank of Scotland were among nine banks that last week agreed a £1.3bn settlement with thousands of investors hit by the rate-rigging scandal.

Lawyers last night warned that the New York deal could open the floodgates for an even bigger number of claims in London – the largest ‘forex’ trading centre in the world.

It is thought that hedge funds, pension funds and other investors could also bring cases against the banks in Hong Kong and Singapore.

‘There will be more claims in London than in New York because it is a far bigger forex market,’ David McIlroy, a barrister at Forum Chambers, told The Financial Times.

He estimated that a settlement in London could amount to ‘tens of billions of pounds’. The other banks to settle last week were Goldman Sachs, Bank of America, JP Morgan, Citi, UBS and BNP Paribas.

Michael Hausfield, a lawyer who worked on the case, said the settlements were ‘just the beginning’.

The £3.5trillion-a-day forex market has been dubbed the ‘wild west’ and traders used chatrooms with names such as ‘The cartel’, ‘The Mafia’ and ‘The Bandits’ Club’ to communicate with each other.

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.