Picture: REUTERS
Picture: REUTERS

Citigroup and Barclays won’t be targeted for fines by South African antitrust authorities for colluding to manipulate the value of the rand because they co-operated with regulators, three people familiar with the matter said.

While they may not yet have full indemnity, their disclosures to the Competition Commission could save them from being penalised if the information they provided is proven correct, the people said, asking not to be identified because the matter is still confidential. The two banks have been working with the commission from an early stage, they said.

Citigroup and Barclays were named as part of the rand-rigging probe that started in 2015. The Competition Commission on Wednesday didn’t name Citigroup and didn’t add Barclays to the list of banks it recommended for fines.

The commission identified lenders including Bank of America Merrill Lynch, HSBC Holdings, BNP Paribas SA, Credit Suisse Group AG, JPMorgan Chase & Co. and Nomura Holdings Inc. as among those that participated in price fixing and market allocation in the trading of foreign-currency pairs involving the rand. It referred the case to an antitrust tribunal.

Traders in New York and Johannesburg used the Reuters trading platform and Bloomberg chatrooms to conspire to rig the rand’s rate, prosecutors will allege, according to one of the people. While the regulator will seek the maximum fines, banks that have cooperated are likely to be granted leniency, the person said.

Fictitious bids

"The respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times," the Competition Commission said in an e-mailed statement Wednesday.

"They assisted each other to reach the desired prices by coordinating trading times. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives."

The prosecution should be shorter than most antitrust cases, due to the straightforward nature of the matter, one of the people said. Regulators aren’t seeking specific action against individual traders from the banks, but are likely to make demands to change incentives that encourage traders to push the boundaries, the same person said.

Other lenders named in the probe include Standard Bank Group, Investec, Standard Chartered, Commerzbank AG, Macquarie Group and Australia & New Zealand Banking Group Ltd.

Barclays Africa, about 50% owned by Barclays, said in an e-mailed statement on Wednesday it has co-operated with the commission and will continue to do so.

Citigroup declined to comment in an e-mail on why it wasn’t on the list of banks facing a fine. London-based Barclays declined to comment.

The commission recommended the banks be fined 10% of their turnover, the maximum allowed.

Bloomberg

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