Regulators fine banks UBS, HSBC, Citigroup, RBS and JPMorgan $4.4 billion in forex probe

A file photo taken on October 15, 2011 shows the logo of the Swiss banking giant UBS seen above its headquarters in downtown Zurich. -- PHOTO: AFP
A file photo taken on October 15, 2011 shows the logo of the Swiss banking giant UBS seen above its headquarters in downtown Zurich. -- PHOTO: AFP

LONDON/ZURICH (Reuters) - Global regulators imposed penalties totalling US$3.4 billion (S$4.4 billion) on five major banks, including UBS, HSBC and Citigroup, on Wednesday in a landmark settlement over allegations of price fixing in the foreign exchange market.

Royal Bank of Scotland and JPMorgan were also fined for attempting to manipulate foreign exchange benchmarks in a year-long probe that has put the largely unregulated US$5 trillion-a-day market on a tighter leash, with dozens of dealers suspended or fired.

Switzerland's UBS swallowed the biggest penalty, paying US$661 million to Britain's Financial Services Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) and ordered by Swiss regulator Finma to hand over 134 million Swiss francs (S$179 million).

Finma also ordered Switzerland's largest bank to automate at least 95 per cent of its global foreign exchange trading and limit bonuses for traders of foreign exchange and precious metals, where it said it had also found evidence of serious misconduct, to 200 per cent of their base salary for two years.

Other bank employees who earn more than 200 per cent of their base salary in bonuses will have to undergo an approval process.

Finma has started enforcement proceedings against 11 former and current employees of UBS.

Barclays, a major player in the foreign exchange market, had been expected to be part of the settlement but the FCA said its investigation into the British bank was continuing.

The UK regulator's first group settlement, worth more than US$1.7 billion, eclipses the £460 million (S$944.5 million) it has so far fined the industry for alleged interest rate manipulation, reflecting increasing political and public demands that banks - blamed for sparking the 2008 credit crisis - are held accountable and culpable for misconduct.

The US CFTC fined the five banks more than US$1.4 billion for attempted manipulation.