Citigroup, HSBC among banks named in Brazil currency probe

The Age, July 4, 2015

Francisco Marcelino

http://www.theage.com.au/world/citigroup-hsbc-among-banks-named-in-brazil-currency-probe-20150704-gi51oz.html

People pass an HSBC branch in Rio de Janeiro last month. Before the probe, HSBC announced a plan to sell its operations in Brazil and Turkey. Photo: Getty Images

Sao Paulo: Fifteen of the world's largest banks are being investigated for currency manipulation by Brazil's antitrust agency after similar probes in the US and Europe led to penalties of more than $US10 billion ($13 billion).

Brazil's Council for Economic Defence, or Cade, as the regulator is known, found "strong signs" of anti-competitive price-fixing practices by banks, according to an emailed statement from the Brasilia-based regulator. It names Citigroup, Morgan Stanley, HSBC and 12 other institutions as being under investigation.

The banks co-ordinated currency transactions and pricing data and blocked competitors from operating freely in the Brazilian foreign-exchange market, according to the allegations.

Barclays is among the banks under the spotlight in Brazil. Photo: Reuters

The accusations mirror cases brought against many of the same firms by regulators in the US and Europe, which reached multibillion-dollar settlements this year that included guilty pleas by New York-based Citigroup, JPMorgan Chase & Co and other banks. South Korea and South Africa have also opened probes into whether firms colluded in foreign-exchange markets.

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"This investigation may create a big problem because some of the banks are large players in the Brazilian currency market," Joao Paulo de Gracia Correa, a foreign-exchange superintendent at Sao Paulo-based SLW Corretora de Valores, said.

One or more of the alleged targets in the Brazil case reached leniency deals with Cade and federal prosecutors, the antitrust agency said, without giving more details.

Sharing information
"There were additional signs of anti-competitive practices such as sharing sensitive commercial information in the currency market, including trades, contracts, futures prices, client orders and strategies," Cade said. The accused have 30 days to respond.
JPMorgan, Bank of America, UBS, Deutsche Bank, Barclays, Credit Suisse, Bank of Tokyo-Mitsubishi, Nomura Holdings, Royal Bank of Canada, Royal Bank of Scotland, Standard Bank and Standard Chartered Bank are also part of the investigation.

Thirty individuals are being probed as well, according to the statement, which said the alleged illegal behaviour occurred from 2007 to 2013.

Officials at the 15 banks either declined to comment on the Cade allegations or couldn't immediately be reached.

The US Justice Department announced a $US5.8 billion settlement in May with six of the world's biggest banks on its currency-rigging probe. South African authorities will probably reach a deal with some the world's biggest banks over accusations they rigged trading in the rand, David Lewis, the former head of the nation's Competition Tribunal, said last month.

Bloomberg