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Major bank charged by EU over forex rigging allegations

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A major European bank has been charged by EU regulators after it was accused of major foreign exchange rate rigging.

Credit Suisse, which is based in Zurich in Switzerland, said that the European Commission had notified it of an allegation that it had “engaged in anticompetitive practices in connection with its foreign exchange trading business”.

The accusations are known as a “statement of objections”. Credit Suisse disclosed that it had received the statement in its quarterly report, which was released last week.

The ongoing investigation meant that both the European Commission and Credit Suisse did not comment in detail on the allegations.

An EU spokesperson, Ricardo Cardoso, was able to confirm to Bloomberg that the regulatory body had filed objections. He did not confirm whether or not other banks had also been subject to the allegations.

Credit Suisse, meanwhile, refused to comment beyond the disclosure in its report.

If Credit Suisse is found guilty of the accusations, it could face severe punishments.

The EU has a history of opting for tough fines on the issue of benchmark interest rate rigging. In addition to the reputational damage that a serious case could inflict, the fines which can be levied on a firm can constitute up to 10% of its worldwide turnover.

The accusations form part of a long-running EU investigation into possible antitrust violations and foreign exchange rate rigging by banks.

French bank BNP Paribas has also disclosed that it has been approached by the Commission, although it is not believed to be directly accused at present. It said last year that it was sent a questionnaire by the Commission covering a range of different questions related to the issue, although no further developments have been made public.

HSBC, meanwhile, admitted in a report in 2017 that it is under investigation for the same issue.

According to Reuters, some banks are negotiating a plea bargain with the EU whereby they admit wrongdoing in exchange for a smaller fine. It is not clear whether Credit Suisse is involved in this, as the banks in question have been left unnamed.

Alternatively, the bank can meet with the Commission to set out its case. Usually, this takes the form of an oral hearing.

The issuing of the document at this stage in the process is designed to give banks the time to accrue the cash needed to pay any potential future fine, as the EU has a history of going for tough penalties.

Despite the EU getting a lot of international attention when it comes to potential antitrust violations, though, other authorities have actually been more proactive with issuing big fines.

In total, about USD $10bn of fines have been levied by a range of individual countries, including Credit Suisse’s home country, Switzerland, along with Britain and the US. JPMorgan Chase & Co has received a fine, as have Barclays and Citigroup.

The EU, by contrast, has only levied fines of around USD $2.3bn in other rate-rigging scandals, including the Euribor and Libor incidents.