JPMorgan, UBS, Barclays, Citigroup and RBS have been fined $5.7 billion in the US for charges including manipulating the foreign exchange market.
Four of them – JPMorgan, Barclays, Citigroup and RBS – have agreed to plead guilty to US criminal charges.
UBS will plead guilty to rigging benchmark interest rates.
Barclays was fined the most, $2.4 billion, as it did not join other banks in November to settle investigations by UK, US and Swiss regulators.
The bank is also sacking eight employees involved in the scheme.
US Attorney General Loretta Lynch said that “almost every day” for five years from 2007, currency traders used a private electronic chat room to manipulate exchange rates.
Their actions harmed “countless consumers, investors and institutions around the world”, Loretta Lynch said.
Separately, the Federal Reserve fined a sixth bank, Bank of America, $205 million over foreign exchange-rigging. All the other banks were fined by both the Department of Justice and the Federal Reserve.
Regulators said that between 2008 and 2012, several traders formed a cartel and used chat rooms to manipulate prices in their favor.
One Barclays trader, who was invited to join the cartel, was told: “Mess up and sleep with one eye open at night.”
Several strategies were used to manipulate prices and a common scheme was to influence prices around the daily fixing of currency levels.
A daily exchange rate fix is held to help businesses and investors value their multi-currency assets and liabilities.
Until February, this happened every day in the 30 seconds before and after 16:00 in London and the result is known as the 4pm fix, or just the fix.
In a scheme known as “building ammo”, a single trader would amass a large position in a currency and, just before or during the fix, would exit that position.
Other members of the cartel would be aware of the plan and would be able to profit.
The fines break a number of records. The criminal fines of more than $2.5 billion are the largest set of anti-trust fines obtained by the Department of Justice.
Meanwhile, the $925 million fine imposed on Citigroup by the Department of Justice was the biggest penalty for breaking the Sherman Act, which covers competition law.
The guilty pleas from the banks are seen as highly significant as banks have settled previous investigations without an admission of guilt.
The Attorney General warned that further wrongdoing would taken extremely seriously: “The Department of Justice will not hesitate to file criminal charges for financial institutions that reoffend.
“Banks that cannot or will not clean up their act need to understand – it will be enforced.”
Royal Bank of Scotland (RBS) is expected to be fined a total of about £400 million ($625 million) by UK and US regulators as a result of the LIBOR scandal.
The head of RBS’s investment banking arm since 2008, John Hourican, is also expected to step down.
However, there is no suggestion he was involved in the scandal.
RBS is accused of colluding with other banks to rig LIBOR rates during the global financial crisis. Barclays and UBS have already received fines.
Business Secretary Vince Cable said the UK government had made it clear to RBS that the fines should be paid from staff bonuses, saying that neither taxpayers nor bank customers should bear the cost.
The government has an 81% stake in RBS following the part-nationalization of the bank during the financial crisis.
“The problem is that these are global banks and if they’ve committed breaches of the law in the US they have to be punished accordingly,” said Vince Cable.
“It is absolutely galling for UK taxpayers to be asked to stump up for it.”
But he acknowledged that the government could not force RBS to act, despite its majority stake.
RBS is expected to be fined a total of about $625 million by UK and US regulators as a result of the LIBOR scandal
In a statement released on Wednesday morning, RBS said it was still in “late-stage settlement discussions” with US and UK authorities over “potential settlements”.
“Although the settlements remain to be agreed, RBS expects they will include the payment of significant penalties as well as certain other sanctions,” the bank said.
Those discussions are taking place with the Financial Services Authority in the UK, the US Commodity Futures Trading Commission and the US Department of Justice.
The greater proportion of the fines are expected to be imposed by the US authorities.
Swiss bank UBS admitted to wire fraud charges against its Tokyo office as part of its £940m settlement with international regulators in December.
Barclays, the first bank to admit to its role in rigging LIBOR, paid a total of £290 million ($460 million).
John Hourican, who earned £3.5 million ($5.5 million) for last year’s work, is expected to lose his bonus for 2012 along with his position as head of RBS’s investment bank. He is also expected to forego £4 million ($6 million) of bonuses from previous years, in order to help pay the expected fines.
John Hourican is the highest profile casualty at the bank since it emerged last year that dozens of bankers had willfully manipulated the key interest rate.
LIBOR, a daily average of borrowing costs announced by a panel of London-based banks, is used to calculate payments on hundreds of trillions of dollars-worth of financial contracts.
A new technology that will enable people to withdraw money from cash machines (ATM’s) using their smartphone has been unveiled.
Customers who use the Royal Bank of Scotland (RBS) or NatWest mobile banking app can now request cash, up to £100 ($160), via their smartphone.
They are given a six-digit code to enter into an ATM to release the cash.
A similar system has been developed by cash machine operator NCR. This requires users to scan a barcode to withdraw the money.
The services are the latest developments in a long-predicted move towards the smartphone becoming a digital wallet.
Customers who use the Royal Bank of Scotland (RBS) or NatWest mobile banking app can now request cash, up to £100 ($160), via their smartphone
RBS said that its new system would help customers who had forgotten their bank cards, or who wished to send cash to family members in a hurry.
It would also allow the people to leave their wallets at home in favor of taking a mobile phone, it suggested.
“It is a really simple and secure way to help our customers get cash whenever and wherever they need it,” said Ben Green, head of mobile at RBS and NatWest.
The service is available to customers who have downloaded the bank’s free app and use the 8,000 RBS, NatWest or Tesco branded ATMs in the UK. Some 2.6 million people have installed it on their smartphone so far, the bank said.
At present, customers using a card can withdraw up to £300 ($480). Initially the limit on the cardless withdrawal will be £100 ($160).
Access to the app requires a password, and the withdrawal code will be hidden until the user taps the screen. This is aimed at preventing thieves from looking over the user’s shoulder to steal the code.
The system is an extension of a RBS service that allowed people whose card had been stolen to access emergency cash from an ATM.
The bank is also unveiling a system which allows customers to make charity donations at its ATMs.
In a separate development, NCR has announced that it has developed software that allows people to scan a barcode on their smartphone at an ATM to release an amount entered in their smartphone.
It is looking for banks and building societies to adopt the software.
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