Banks fined over 'Essex Express' foreign exchange cartels

16 May 2019, 10:57 | Updated: 16 May 2019, 13:49

Five banks have been fined a total of €1.07bn (£936m) for taking part in foreign exchange trading cartels dubbed "Three Way Banana Split" and "Essex Express".

Barclays and Royal Bank of Scotland were among the lenders handed penalties by the European Commission relating to collusion over trading in 11 currencies dating back more than a decade.

Citigroup, JP Morgan and MUFG were also fined, while a sixth bank, UBS, was named in the investigation but avoided punishment after it blew the whistle on the cartels.

The commission said the traders involved exchanged sensitive information and trading plans and occasionally coordinated trading activities through chatrooms.

Most of the traders knew each other personally.

"Some of the traders created the chatrooms and then invited one another to join, based on their trading activities and personal affinities, creating closed circles of trust," the commission said.

The "Essex Express 'n the Jimmy" chatroom was so called because all but one participant, James, lived in Essex, and met on a train to London.

Other chatrooms were called "Semi grumpy old men", "Two and a half men" and "Only Marge".

Information exchanged on these platforms enabled traders "to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when".

Commissioner Margrethe Vestager said: "Companies and people depend on banks to exchange money to carry out transactions in foreign countries.

"Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day.

"The commission will not tolerate collusive behaviour in any sector of the financial markets.

"The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers."

Barclays was fined a total of €210m (£184m) and taxpayer-backed RBS €249m (£218m).

US banks Citigroup and JP Morgan were given penalties of €311m (£272m) and €229m (£200m) while Japan's MUFG was fined €70m (£61m).

RBS said the fine was covered by money already set aside by its NatWest Markets subsidiary.

Lawyers at City firm RPC said the European Commission findings could prompt those impacted by the cartels, who may include institutional investors, pension funds and large companies, to sue the banks.

Chris Ross, partner at RPC, said: "Given that billions of pounds in forex trade each day, with a huge volume of that going through London, these lawsuits are likely to add up to very substantial amounts."