UK banks given two months to settle forex probe

Six banks have been given two months by the UK watchdog to accept a billion pound plus settlement of the long running foreign exchange trading scandal.

The Financial Conduct Authority (FCA) could well impose fines much higher than £100 million and possibly well in excess of the UK record £160 million  handed to each of the big six - Barclays, Royal Bank of Scotland, HSBC, JP Morgan, Citybank and UBS - if they agreed to the deal, The Independent reported.

The settlement offer, however, does not so far include overseas watchdogs, including the all-important US regulators. Several watchdogs are involved in the multi-national inquiry at the US end, all of which could impose penalties many times the size of the record fine imposed by a UK watchdog on UBS.

The £160-million levy formed only a part of the $1.5 billion global settlement over Libor rigging.

According to commentators, regulators appeared to be keen to draw a line under the foreign exchange trading scandal, which was causing real fear in the financial industry due to the instability it was creating.

The industry's legal and regulatory issues were also complicating the government's efforts to sell the state's interest in the sector, especially in the case of Royal Bank of Scotland.

Reuters reported citing sources, that the FCA met officials from UBS, Barclays, HSBC, Royal Bank of Scotland, JP Morgan and Citi this week and discussed the possibility of a group settlement that would see the banks fined different amounts depending on the gravity of the alleged misconduct.

According to one source familiar with the matter, the aggregate fine could amount to around £1.8 billion with the maximum fine for one bank expected between £300 million and £400 million and others pegged below £300 million.

According to the source, the figures which were far larger than any individual fine earlier levied by the FCA, include a 30-per cent discount for early settlement.

According to Sky News, which first reported this week's meetings, a settlement could cost lenders around £2 billion and could be announced as soon as November.

According two sources, the next step in the FX talks could be in November, which would coincide with G20 leaders signing off on proposals from global regulators to reform and strengthen the $5.3 trillion-a-day currency market.