Compliance

South Africa Orders Citigroup To Pay Over $5 Million; Grants Barclays Immunity From Rigging Probes

Josh O'Neill, Assistant Editor, 22 February 2017

articleimage

South Africa's Competition Commission, which accused Citigroup of rigging the foreign exchange market, has exempted UK-based bank Barclays from prosecution.

New York-headquartered Citigroup agreed to pay a penalty of almost $5.4 million to settle a South African probe that alleged it took part in a cartel that manipulated the value of the rand. 

South Africa's Competition Commission earlier this week said from  “at least 2007”, Citigroup colluded with other banks on prices for bids, offers and bid-offer spreads that related to the US dollar and rand currency pair. Citigroup, among others, manipulated the price of bids and offers by creating false bids and offers at particular times, and also entered into agreements to refrain from trading, the competition watchdog said.

Citigroup will make witnesses available to help prosecute other banks that were involved, the commission says. 

“The settlement was done to encourage speedy settlement and full disclosure to strengthen the evidence for prosecution of the other banks,” said commissioner Tembinkosi Bonakele. 

The commission's probe is the latest in a string of worldwide investigations into alleged rigging by banks of the $5.1 trillion-a-day market for products linked to foreign exchange. Since 2013, more than $10 billion of penalties have been handed out to banks for manipulating foreign exchange markets.

The competition watchdog said that Bank of America Merrill Lynch, HSBC, BNP Paribas, Credit Suisse, JP Morgan, Nomura International, Commerzbank, Macquarie, Australia & New Zealand Banking Group, Investec, Standard Chartered and Standard Bank Group should also be fined.

However, it has granted UK-based bank Barclays conditional immunity from prosecution in exchange for its continuing cooperation, Bonakele reportedly told a parliamentary committee on Tuesday.

"We did, through the investigation, receive a leniency application from Barclays/ABSA which cooperated and gave us more information," he reportedly said.

"We have a conditional agreement with them on immunity but this is subject to confirmation depending on the extent of their cooperation," he reportedly added. 

Across the board, the commission recommended fines amounting to 10 per cent of the banks' South African revenues. However, a tribunal determines the final penalties based on “affected revenue” from banks' foreign exchange units and the periods over which the offences took place. 

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes