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Standard Bank‚ Absa face prosecution‚ huge fines over price fixing allegations
#1
They are accused by the Competition Commission of manipulating the price of the rand when selling and buying dollars- through making fictitious orders to buy and sell rand to change supply of the currency. They are also accused of using trading chat rooms to co-ordinate times for the sale of rand or stop selling for a time in order to manipulate prices from 2007.

"This is a big deal‚" said market commentator and trader Simon Brown

He said it was a major announcement because "our Competition Commission are good at what they do".

When it comes to price fixing‚ "they are not often wrong on everything from bread to bicycles". He also said the rand affected the petrol price and this is also why accusations of manipulating currency has implications and is of huge interest for South Africans.

The commission said in a press release on Wednesday afternoon that it was "seeking an order from the Tribunal declaring that the respondents have contravened the Competition Act".

It is "seeking an order declaring that the Bank of America Merrill Lynch International Limited‚ BNP Paribas‚ JP Morgan Chase & Co‚ JP Morgan Chase Bank N.A‚ 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 are liable for the payment of an administrative penalty equal to 10% of their annual turnover".

Brown said‚ "that list of banks involved is so long‚ one almost asks‚ 'who is not the list?'"

He said that banking scandals had become common gobally. "We have seen so many of them‚ with accusations of banks manipulating the gold price and LIBOR rates in Britain. There is a lot of dodgy stuff." Banks never admit they were wrong but pay large non-admission of guilt fines‚ said Brown.

The three local banks: Absa‚ Standard Bank and Investec share prices barely moved after the announcement. Brown said this may be partly as the investigation by the tribunal would take a long time. "I am expecting a Twitter storm. The banks are under huge pressure in South Africa."

Most foreign banks had local financial assets and offices that could be attached if they were eventually fined making it not so easy to ignore local competition authorities.

- TMG Digital
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#2
I guess only time will tell whether something will actually come of this, either way, am hopeful the rand straightens more now.

#3
Well if this is true and they did influence the rand, then I feel they should face real consequences as this affects the bottom line and cause some parents to not be able to afford to feed their child. Banks makes me sick in general.
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#4
JOHANNESBURG – South Africa’s ruling ANC party called on Thursday for the toughest possible sanctions against more than a dozen local and foreign banks accused of rigging the rand currency, piling political pressure on lenders that have become a target for public anger.

The Competition Commission said on Wednesday it had found the banks, including US, European, Japanese and Australian lenders, had colluded to coordinate their trading activities when dealing in the rand and US dollar.

South Africa’s banking index fell 1% on Thursday after the commission, which has been conducting an investigation since April 2015, recommended heavy fines be imposed on the lenders.

The ANC attacked the banks, which many South Africans view as a symbol of the stark racial inequality that persists 23 years after the fall of apartheid. 

“The African National Congress takes an extremely dim view of the activities of the listed banks. These acts of corruption have crudely exposed the ethical crisis in the South African banking sector,” the party said in a statement.

“It is further an indication of how the markets are and can be manipulated by dominant oligopolies to cripple its functioning to suit their nefarious agendas.”

Financial regulators are clamping down worldwide, with dozens of traders fired and big banks fined around $10 billion in total in separate cases for rigging the level of the Libor interest rates and other market benchmarks.

The opposition Democratic Alliance accused the ANC of politicising the issue, saying ministers want “to do battle with the banks, regardless of the economic fallout”.

Michael Cardo, who speaks on economic development for the right-leaning party, said President Jacob Zuma’s State of the Nation Address last week had made clear “he intends using the competition authorities as a tool of his populist and destructive agenda of ‘radical economic transformation'”.

Last year the ANC suffered its worst ever local election performance as the left-wing Economic Freedom Fighters (EFF) won over many poor black South Africans with promises of radical redistribution of wealth.

The EFF and sections of the ANC often criticise banks for keeping the wealth of the country in the hands of the white elite. This has turned up the heat on the banks, where a majority of executives are white despite black people making up 80% of the population.

The investigation found that from at least 2007, banks had an agreement to collude on prices for bids, offers and bid-offer spreads for spot trades involving the rand – whose international market code is ZAR – and the US dollar, the commission said.

Its inquiry centred on an instant messaging chat room called “ZAR Domination”, which the commission said was used to coordinate trading activities when giving quotes to customers who buy or sell currencies.

Fines should amount to 10% of the banks’ annual revenues, the commission recommended, without saying whether this should relate to global revenues or just their South African business.

The banks and brokerages named in the case were Citigroup, Nomura, Standard Bank, Investec, JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank, Standard New York Securities, Macquarie Bank, Bank of America Merrill Lynch (BAML), ANZ Banking Group, Standard Chartered and Barclays Africa (Absa), part of the Barclays Plc.

Investec and Barclays both said they would cooperate with the probe while Standard Bank, BAML, Nomura, Credit Suisse, ANZ and Standard Chartered declined comment. The others have yet to comment.

Source: http://www.moneyweb.co.za
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#5
oligopoly
ˌɒlɪˈɡɒp(ə)li/
noun
plural noun: oligopolies
a state of limited competition, in which a market is shared by a small number of producers or sellers.

- learned a new word
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#6
(02-16-2017, 02:18 PM)Spreadsheet Ranger Wrote: oligopoly
ˌɒlɪˈɡɒp(ə)li/
noun
plural noun: oligopolies
a state of limited competition, in which a market is shared by a small number of producers or sellers.

- learned a new word

I remember that word from lectures as I always saw it as Oli go Poly. But I knew what it meant.

#7
They should also be investigated for price fixing: bank charges.

Capitec is now the 3rd biggest retail bank in SA, they have more clients than FNB and Nedbank. And Capitec clients pay an average bank charge fee of R50 per month...


#8
(02-16-2017, 04:32 PM)padjakkels Wrote: They should also be investigated for price fixing: bank charges.

Capitec is now the 3rd biggest retail bank in SA, they have more clients than FNB and Nedbank. And Capitec clients pay an average bank charge fee of R50 per month...

I heard somewhere it might be because Capitec doesn't rely on the old legacy systems the other banks have to use?

No idea how Capitec does it.

#9
CAPE TOWN (Reuters) - South Africa's Competition Commission has granted Barclays Africa conditional immunity from prosecution in return for its continuing cooperation in the rand currency trading probe, the head of the Commission said on Tuesday.

The Commission said last week it had found more than a dozen local and foreign banks colluded to coordinate trading in the rand and the U.S dollar using an instant chat room called "ZAR Domination".

It recommended fines amounting to 10 percent of the banks' South African revenues in a scandal that has piled political pressure on the country's big four banks and raised questions about their dominance in Africa's most industrialised economy.

The local lenders have around a 90 percent market share of the South African banking market.

"We did, through the investigation, receive a leniency application from Barclays/ABSA which cooperated and gave us more information," The head of the Commission Tembinkosi Bonakele told a parliamentary committee on Tuesday.

"We have a conditional agreement with them on immunity but this is subject to confirmation depending on the extent of their cooperation."

Barclays Africa, whose branches are branded ABSA and is a regional subsidiary of Barclays Plc, did not immediately respond to a request for comment.

On Monday the Commission said that the local arm of Citigroup had agreed to pay a reduced $5 million penalty in settlement for its role in the alleged currency trading cartel after it "undertook to cooperate".

"I would say that the settlement was low, but as a prosecutor you sometimes have to make these calls because we have a bigger case to run," Bonakele said on Tuesday, referring to Citi.

The scandal has rattled the share prices of the South African-listed banks, with the sector index having dropped by nearly 4 percent over the last four sessions.

Anglo-South African investment bank and asset manager Investec has said again following a statement made earlier this week that it would seek further information from the regulator in order to continue to cooperate, according to an internal memo seen by Reuters.

"The Competition Commission's case against Investec Limited is confined to the alleged conduct of a single trader who is employed by the bank. This particular trader dealt with interbank clients," Investec said in the memo.

Revenue from Investec's foreign exchange division averaged below 1 percent of its South African bank's total revenue over the last 10 years, according to the memo. Investec's local banking unit reported 10.4 billion rand in total operating income in the year ended March, 2015.

GLOBAL SCANDAL

The Commission began its investigation in April 2015, joining an international probe into the manipulation of foreign exhange rates that has led to big banks paying more that $10 billion in settlements.

Former Citigroup foreign exchange dealer Christopher Cummins and Jason Katz, who worked at Barclays and later BNP Paribas SA, pleaded guilty in the United States to conspiring to fix currency prices last month.

Both, along with several others, are named in the South African regulator's report on its investigation that has been referred to the Competition Tribunal, which holds hearings on antitrust matters before giving a ruling.

Bonakele said the Commission was seeking a maximum penalty against other banks whose traders are alleged to have been involved in the scandal but the "door was not closed" for those seeking to apply for leniency in exchange for information that would help lead to a successful prosecution.

President Jacob Zuma said last week that the government would clamp down hard on financial market abuse.

Other banks and brokerages named in the case were Nomura, Standard Bank, Investec, JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank AG, Standard New York Securities Inc, Macquarie Bank, Bank of America Merrill Lynch (BAML), ANZ Banking Group Ltd and Standard Chartered Plc

Officials at Standard Bank, BAML, Commerzbank, BNP Paribas, Nomura, Credit Suisse, ANZ, Macquarie and Standard Chartered have so far declined to comment. The other banks have not responded to requests for comment.

($1 = 13.1161 rand)

(Additional reporting by Tiisetso Motsoeneng; Editing by James Macharia, Greg Mahlich)

First Published: 2017-02-21 10:41:43
Updated 2017-02-21 19:25:44

Original Article by Thomson Reuters.
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#10
JOHANNESBURG (Reuters) - South African lender Barclays Africa asked for forgiveness on Thursday for its role in rigging the local currency, a scandal that has raised questions over the dominance of four big local banks.

"We deeply regret that this conduct took place within our organisation," Chief Executive Maria Ramos said. "Those who are found to have contravened our rules and conduct will in due course be held accountable."

South Africa's Competition Commission said last week that it had found more than a dozen local and foreign banks had colluded to coordinate trading in the rand and the U.S dollar using an instant chat room called ZAR Domination, a reference to the rand's official currency market code.

It recommended fines amounting to 10 percent of the banks' South African revenues in a scandal that has also piled political pressure on the four banks, which have around 90 percent of the national banking market.

The Commission began its investigation in April 2015, joining an international probe into the manipulation of foreign exchange rates that has led to big banks paying more that $10 billion in settlements.

Barclays Africa, a regional unit of Britain's Barclays Plc, has already been granted conditional immunity from prosecution in return for supplying information that would lead to the successful prosecution of the other cartel members.

Local lender Standard Bank, which is also among the 17 named in the investigation, said on Thursday it is in talks with the watchdog and has not so far suspended any employees.

"Pending the outcome of these engagements and in the light of these historic allegations only having been brought to Standard Bank's attention on Feb. 15, no suspension of current employees of Standard Bank has taken place," it said in a statement.

The local arm of Citigroup agreed to pay a reduced $5 million penalty for cooperating in the investigation while Investec has said it will seek further information from the regulator to continue to co-operate.

Finance Minister Pravin Gordhan said in his budget speech on Wednesday that the government would crack down on anti-competitive behaviour with new regulation.

The scandal has weakened the share prices of South Africa's listed banks. The sector index dropped by about 1 percent by mid-session on Thursday.

Former Citigroup foreign exchange dealer Christopher Cummins and Jason Katz, who worked at Barclays and later BNP Paribas SA, pleaded guilty in the United States to conspiring to fix currency prices last month.

Both, along with others, are named in the South African regulator's report on its investigation that has been referred to the Competition Tribunal, which holds hearings on antitrust matters before giving a ruling.

(Reporting by TJ Strydom and Tiisetso Motsoeneng; Writing by James Macharia; Editing by David Goodman/Ruth Pitchford)
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#11
We're sorry we rigged the rand: Barclays

Barclays Africa - aka Absa - asked for forgiveness yesterday for its role in rigging the rand , a scandal that has raised questions over the dominance of the big four local banks.

"We deeply regret that this conduct took place within our organisation," CE Maria Ramos said. "Those who are found to have contravened our rules ... will be held accountable."

The Competition Commission said last week it had found more than a dozen local and foreign banks had colluded to co-ordinate trading in the rand and the US dollar using an instant chat room called ZAR Domination, a reference to the rand's market code.

It recommended fines amounting to 10% of the banks' South African revenues and piled political pressure on the four banks, which have about 90% of the national banking market.

The commission began its investigation in April 2015, joining an international probe into the manipulation of foreign exchange rates that has already led to big banks paying more than $10-billion in settlements.

Absa, a regional unit of UK's Barclays, has already been granted conditional immunity from prosecution in return for supplying information that might lead to the successful prosecution of the other alleged cartel members.

Standard Bank, which is also among the 17 named in the investigation, said yesterday it was in talks with the watchdog. No employees had been suspended.

"Pending the outcome of these engagements and in the light of these historic allegations only having been brought to Standard Bank's attention on February 15, no suspension of current employees of Standard Bank has taken place," it said.

The local arm of Citigroup agreed to pay a reduced $5-million penalty for co-operating in the investigation; Investec has said it will seek information from the regulator about co-operating.

Finance Minister Pravin Gordhan said in his Budget speech on Wednesday that the government would crack down on anti-competitive behaviour with new regulations.

The scandal has weakened the share prices of South Africa's listed banks. The sector index dropped by about 1% by mid-session yesterday.

Former Citigroup foreign exchange dealer Christopher Cummins and Jason Katz, who worked at Barclays and later BNP Paribas SA, last month pleaded guilty in the US to conspiring to fix currency prices.

Both, with others, are named in the South African regulator's report on its investigation that has been referred to the Competition Tribunal, which holds hearings on antitrust matters before giving a ruling.

Source: http://www.timeslive.co.za/thetimes/2017...d-Barclays
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