Europe’s banks toil towards closure on conduct scandals

September 29, 2014, 2:00 PM UTC
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Like Sisyphus rolling the boulder up the mountain, Europe’s banks are toiling to rebuild their reputations after the welter of scandals that has hit them in recent years.

Switzerland’s UBS AG (UBS) admitted Monday that it was in talks to settle allegations that its traders had rigged benchmark foreign exchange rates, saying it could face “material monetary penalties” from negotiations with regulators. It’s also facing class action lawsuits in U.S. federal courts from FX market participant who claim they suffered losses as a result of market manipulation.

UBS’s announcement follows on from reports on Friday that the U.K.’s Financial Conduct Authority had held talks with six of the largest banks caught up in the FX benchmark manipulation affair, indicating that it was looking to impose what would be record fines to settle the matter.

In addition to UBS, the FCA also held talks with Citigroup (C), JP Morgan Chase & Co. (JPM), Barclays Plc (BCS), Royal Bank of Scotland Plc (RBS) and HSBC Holdings Plc (HBC). Between them the six face fines of over $2.5 billion, according to media reports.

Those reports suggest that banks look to have failed in their efforts to head off a repeat of the disastrous scandal over manipulation of benchmark interest rates such as the London Interbank Offered Rate, or Libor. Deutsche Bank AG (DB) and Citi have already fired staff in relation to the investigation. Even the Bank of England has suspended an official as it looks into its role in the administration of sterling fixings.

The Libor scandal, meanwhile, keeps claiming more victims. Lloyds Banking Group Plc (LYG), which has already been fined some $350 million for its role in the Libor scandal, said Monday it had fired eight employees implicated in manipulating rates, clawing back some $4.8 million in bonuses.

Lloyds didn’t name the people dismissed, and a spokesman declined to say how far up the bank’s hierarchy the measures had gone. All the employees affected still have the right to appeal.

Meanwhile, across the channel, BNP Paribs (BNPQY) announced at the weekend that Jean Lemierre, formerly president of the European Bank for Reconstruction and Development, would succeed Baudoin Prot as chairman. Prot had announced he would stand down earlier last week, in the wake of a $9 billion fine from U.S. regulators for helping Iran, Sudan and others to get round U.S. sanctions over a course of years.