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Banks in rand-rigging probe in behind-scenes negotiations

Some lenders may end up paying penalties, admitting liability, rather than being dragged through lengthy hearings.

Behind-the-scenes talks may result in some of the banks named in South Africa’s probe into rand manipulation paying penalties rather than being dragged through lengthy hearings, the regulator said.

Some of the lenders are in confidential talks with the Competition Commission that may lead to a settlement, Sipho Ngwema, a spokesman for the Pretoria-based regulator, said in an emailed response to questions on Friday, declining to identify the banks. The lenders that want to settle must agree to an admission of liability, he said.

All but one of the 14 banking entities in the probe have filed papers saying the antitrust body doesn’t have jurisdiction, that the case be amended or dismissed, or criticizing the charges against them as being too vague. Only Standard Chartered Plc hasn’t filed what’s called an exception application. The U.K. lender declined to comment when asked if it was in settlement talks with the commission. 

Standard Bank Group Ltd., Commerzbank AG, Investec Ltd., Australia and New Zealand Banking Group Ltd., Nomura International Plc, BNP Paribas SA and Macquarie Group Ltd., that were also named in the probe, declined to comment.

Maximum Penalties

“We will continue to co-operate fully” with the competition authorities, Standard Chartered said in an emailed response to questions on Thursday. “Standard Chartered remains committed to adhering to the laws and regulations in each market where we operate.”

Citigroup Inc. in January agreed to pay a R69.5 million ($5.2 million) fine for its alleged role in manipulating the rand, while Barclays Africa Group Ltd. may be exempt from a penalty because it blew the whistle on the traders’ alleged actions. Bank of America Corp., JPMorgan Chase & Co., HSBC Bank Plc and Credit Suisse Group AG have also been identified in the investigation.

The commission recommended the banks be fined 10% of turnover, the maximum allowed, and the penalty will be based on revenue from their foreign-exchange units. Aside from using a common trading platform, holding meetings and discussing strategy over the phone, the traders had an instant messaging chatroom called “ ZAR Domination” where they would agree on their currency trades, according to the commission.

© 2017 Bloomberg


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