Big fines may not be enough to deter bad behaviour in banks
Richard Edgar
Former Economics Editor
After a 19 month-long investigation, regulators in New York and London have revealed that financial traders can't spell and exchange excruciating banter ... while ripping off their clients. Barclays and RBS have been fined alongside three American banks for manipulating the foreign exchange markets.
Referring to themselves as "The Cartel" or "The 3 Musketeers," traders from rival banks shared information about their clients' plans to buy or sell currencies and colluded to move the market price higher or lower to suit their own profits - at the expense of those clients.
"If you aint cheating you aint trying," wrote one in a private chatroom, while another message concluded "we delivered [in rigging the market] but I don’t wanna kiss from you...i just take a beer."
According to papers filed in New York this went on for five years, "at least" until 2013 - and investigations are continuing.
Antony Jenkins, chief executive at Barclays, apologised for the bank's role in the scandal. RBS has also so far dismissed three staff and a further two are suspended.
Barclays has been fined just over £1.5 billion for its part (and has fired eight trading staff) while RBS is paying about £254 million. Astonishing numbers but more astonishing still, perhaps, is the reaction in the market as share traders piled in to their shares sending Barclays up over 3% today and RBS almost 2% - investors had feared even higher fines.
This perhaps shows how difficult it is to stamp out exploitative behaviour in financial services. These foreign exchange traders were fiddling their customers long after the Libor rate-fixing scandal had broken, involving colleagues at the same banks so would have known the stink foul play had caused. The fines in that case didn't put them off either.
Those sacked have been at the front line or a little further up the management line but it's noticeable that the top brass at each of the banks remains in place. Perhaps bank bosses will have to be threatened before they finally push through the cultural changes which will make it OK to try without cheating.