RBS Settles With FCA, CFTC On Forex Failings As Regulators Fine Five Banks

(RTTNews) - Royal Bank of Scotland Group Plc. (RBS, RBS.L) Wednesday said it has reached a settlement with the Financial Conduct Authority or FCA in the U.K. and the United States Commodity Futures Trading Commission or CFTC regarding investigations into failings in the bank's Foreign Exchange business within its Corporate & Institutional Banking division.

The FCA and the CFTC, in separate statements made today, imposed penalties on certain banks for violations regarding their foreign exchange operations.

RBS said it has agreed to pay penalties of 217 million pounds ($345.6 million) to the FCA and $290 million to the CFTC to resolve the investigations.

The lender said these penalties are covered by the 400 million pounds provision recorded in the third-quarter 2014 results.

RBS continues to be in discussions with other governmental and regulatory authorities on these issues, including the United States Department of Justice and certain other financial regulatory authorities.

The lender added that the timing and amounts of any further settlements and related litigation risks remain uncertain and could be significant.

Ross McEwan, RBS Chief Executive, said, "We have insisted on a comprehensive investigation and an open and honest dialogue with the regulators. I am grateful to the FCA and the CFTC for recognising RBS's cooperation throughout the process and the remediation work we have already undertaken in the Corporate & Institutional Banking division."

Meanwhile, the FCA said it has imposed fines totaling about 1.115 billion pounds or about $1.7 billion on five banks for failing to control business practices in their G10 spot foreign exchange operations.

The affected banks include Swiss banking giant UBS AG (UBS), British lenders HSBC Holdings Plc (HBC, HSBA.L), and Royal Bank of Scotland Group Plc (RBS, RBS.L) as well as US financial giants JPMorgan Chase & Co. (JPM) and Citigroup, Inc. (C).

The FCA fined Citibank N.A. about 225.575 million pounds, HSBC about 216.363 million pounds, JPMorgan about 222.166 million pounds, and UBS about 233.814 million pounds.

In relation to Barclays Bank Plc (BARC.L, BCS), the authority said it will progress investigation into that firm which will cover its G10 spot FX trading business and also wider FX business areas.

FCA said the G10 spot FX market is a systemically important financial market, and the failings at these banks undermine confidence in the UK financial system and put its integrity at risk.

These failings allowed traders at those Banks to behave unacceptably. They shared information about clients' activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates.

Elsewhere, the CFTC issued five orders filing and settling charges against Citibank N.A., HSBC Bank plc, JPMorgan Chase Bank N.A., RBS and UBS AG for attempted manipulation of, and for aiding and abetting other banks' attempts to manipulate, global foreign exchange benchmark rates to benefit the positions of certain traders.

The orders collectively impose over $1.4 billion in civil monetary penalties, specifically with $310 million each for Citibank and JPMorgan, $290 million each for RBS and UBS, and $275 million for HSBC.

The orders also require the banks to cease and desist from further violations, and take specified steps to implement and strengthen their internal controls and procedures.

RBS.L is up 0.2 percent in early trade at 378.35 pence. UBS rose 0.4 percent in Zurich to 16.82 Swiss francs. HSBA.L, meanwhile, fell 0.8 percent to 632.50 pence.