Citibank to pay R69.5m in rand rigging scandal

Cape Town - Citibank has agreed to pay an administrative penalty of R69.5m for being part of the forex trading cartel.

The Competition Commission announced the settlement of R69 500 860 on Monday, which was filed with the Competition Tribunal.

READ: Punish guilty banks harshly, urges ANC

"This figure does not exceed 10% of Citibank NA’s annual turnover in the Republic of South Africa. Citibank NA undertook to cooperate with the Commission and avail witnesses to assist the prosecution of the other banks that colluded in this matter."

The Commission found that from at least 2007, Citibank and its competitors had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US dollar/rand currency pair.

Further, the Commission found that Citibank and its competitors manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times.

READ: How banks allegedly colluded on currency trades

Last week, the Competition Commission referred a collusion case to the Competition Tribunal for prosecution against 17 banks, including three of South Africa's big banks.

The banks are Bank of America Merrill Lynch International Limited,  BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank NA, Investec Ltd, Standard New York Securities Inc, HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc, Macquarie Bank Limited, Citibank NA, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc (Respondents).

The commission found that traders allegedly primarily used trading platforms such as the Reuters currency-trading platform as well as Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities.

READ: Treasury touts Twin Peaks bill amid banking scandal

They assisted each other to reach the desired prices by coordinating trading times. They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency-trading platform. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.

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

Since the collusion reports, President Jacob Zuma, the ANC and National Treasury have also weighed in on the matter, calling for tighter control measures to stop anti-competitive practices and urgent remedies to the "over-concentration" in South Africa’s banking sector. 

Analysts said investigation into collusion couldn’t have come at a worse time for banks, as they have attempted to maintain the moral high ground since the closure of the bank accounts of the Gupta family. 

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