finance

NatWest among British banks fined by EU for foreign exchange cartel



HSBC, NatWest, Barclays and Credit Suisse have been fined a combined £293m by the European Commission (EC) for rigging the foreign exchange spot trading market.

HSBC was hit with the highest penalty at £148.3m, followed by Credit Suisse at £70.9m, then Barclays with £46.2m and NatWest on £27.7m.

UBS was spared a 80m fine because it blew the whistle on the cartel.

The EC said HSBC, Barclays and NatWest had their fines cut for cooperating with the investigation.

In a statement it explained that several foreign exchange spot traders “exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through an online professional chatroom called Sterling Lads”.

This enabled the traders to make informed market decisions on whether and when to sell or buy the currencies they had in their portfolios, rather than acting independently of each other and taking a risk in making these decisions.

Margrethe Vestager, EC vice president, said: “The collusive behaviour of the five banks undermined the integrity of the financial sector at the expense of the European economy and consumers.”

The investigation focused on the trading of the G10 currencies – the most liquid and traded currencies worldwide.

The EC said the fines brought to a close its sixth cartel investigation in the financial sector since 2013.

Separately, the Bank of Ireland (BoI) has been fined €24.5m for breaching regulations over its IT systems.

The Irish Central Bank said the fine was for failures to have the proper frameworks in place to ensure continuous service for the bank and its customers in the event of significant disruption.

It stated that deficiencies had been repeatedly identified from 2008 onwards but had only been recognised and addressed in 2015.

Efforts to address the failings were completed in 2019. The five breaches of regulations took place between 2008 and 2019.

Seana Cunningham, director of enforcement and anti-money laundering at the central bank, said: “The extent and duration of these breaches were particularly serious given the ‘always on’ nature of the services BoI provides and how pivotal IT is to the entirety of its business operations.

“The impact of these breaches meant that had a severe disruption event occurred, BoI may not have been able to ensure continuity of critical services, such as payment services.”

A spokesperson for Bank of Ireland responded: “Bank of Ireland has admitted five breaches – related to its IT service continuity framework and related internal controls between 2008 and 2019 – to the Central Bank of Ireland.

“Bank of Ireland fully acknowledges, and sincerely apologises for, each of these breaches which should not have arisen.

“To comprehensively address these breaches the bank has invested heavily in IT service continuity, completing an extensive group-wide programme of work between 2015 and 2019.

“Following the actions taken, Bank of Ireland has robust IT service continuity processes in place and continues to invest heavily in this area as technological requirements evolve.”

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