London - Citigroup and Barclays won’t be targeted for fines by South African antitrust authorities for colluding to manipulate the value of the rand because they co-operated with regulators, three people familiar with the matter said.
While they may not yet have full indemnity, their disclosures to the Competition Commission could save them from being penalized if the information they provided is proven correct, the people said, asking not to be identified because the matter is still confidential. The two banks have been working with the commission from an early stage, they said.
Citigroup and Barclays were named as part of the rand-rigging probe that started in 2015. The Competition Commission on Wednesday didn’t name Citigroup and didn’t add Barclays to the list of banks it recommended for fines. The commission identified lenders including Bank of America Merrill Lynch, HSBC Holdings, BNP Paribas, Credit Suisse Group, JPMorgan Chase & Co and Nomura Holdings as among those that participated in price fixing and market allocation in the trading of foreign-currency pairs involving the rand. It referred the case to an antitrust tribunal.
Traders in New York and Johannesburg used the Reuters trading platform and Bloomberg chat-rooms to conspire to rig the rand’s rate, prosecutors will allege, according to one of the people. While the regulator will seek the maximum fines, banks that have cooperated are likely to be granted leniency, the person said.
“The respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times,” the Pretoria, South Africa-based commission said in an e-mailed statement Wednesday. “They assisted each other to reach the desired prices by coordinating trading times. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.”
The prosecution should be shorter than most antitrust cases, due to the straightforward nature of the matter, one of the people said. Regulators aren’t seeking specific action against individual traders from the banks, but are likely to make demands to change incentives that encourage traders to push the boundaries, the same person said.
Other lenders named in the probe include Johannesburg-based Standard Bank Group, Investec, which has units in South Africa and the UK, Standard Chartered, Commerzbank, Macquarie Group and Australia & New Zealand Banking Group.
South African President Jacob Zuma called for action against market abuse, while the National Treasury said reckless behaviour must be “punished and brought to an end.”
“If proven to be true, it would confirm the pervasiveness of unbridled greed within the ranks of the forex trading sections of banks,” the Treasury said in an e-mailed statement.
Barclays Africa, about 50 percent owned by Barclays, said in an e-mailed statement on Wednesday it has cooperated with the commission and will continue to do so. Citigroup declined to comment in an e-mail on why it wasn’t on the list of banks facing a fine. London-based Barclays declined to comment.
The commission recommended the banks be fined 10 percent of their turnover, the maximum allowed.