Barclays, HSBC and RBS face $900m forex rigging bill as firms gear up for raft of UK litigation

Five banks settled with regulators on Thursday (22 October) formalising agreements to pay multimillion-dollar sums to victims of manipulated forex trading.

Barclays has come out the worst, agreeing to pay $384m. HSBC will pay $285m and the Royal Bank of Scotland (RBS) will pay $255m.

The Goldman Sachs Group settled for $135m and BNP Paribas will pay out $115m.

A further seven banks including Standard Chartered, Deutsche Bank, Credit Suisse and Société Générale have yet to settle with regulators over forex rigging claims.

To date a number of global banks have agreed to pay out around £2.6bn since US and UK regulators opened global investigations into forex rigging.

Thursday’s outcome will provide further fuel for a raft of firms already gearing up to bring forex claims against the banks in London.

US firm Scott & Scott is preparing to file a claim for investors who lost money as a result of forex-rigging while it awaits Solicitors’ Regulation Authority (SRA) approval.

Head of its London office and ex-Freshfields Bruckhaus Deringer lawyer Belinda Hollway is working with Brick Court Chambers’ Daniel Jowell QC to prepare the claim, which will be lodged the same day Scott & Scott is granted a licence to practise in England and Wales by the SRA.

The claim is expected to reach into the hundreds of millions of pounds and will have far-reaching implications for UK banks. Around 40 per cent of all forex trading was done through London, while just 20 per cent of trading was done through the New York market.

The size of the forex trading market in London means the potential compensation is likely to exceed that handed out in the US.

Hollway said: “We will soon be ready to bring an action against the banks in London. We have clients signed up across the UK, Europe and Asia – all of whom suffered substantial losses on their foreign exchange transactions as a result of manipulation by the banks.”

Scott & Scott’s proposed UK action follows a 2013 US lawsuit for nationwide victims of forex rigging.

Covington & Burling is also understood to be preparing a forex claim in London with former King & Wood Mallesons litigation chief Alex Leitch taking a lead role in the preparation.

Hausfeld is also preparing to file a claim in the UK, with London head Anthony Maton heading up plans.

Forex rigging has been touted as the biggest scandal to hit the financial sector since Libor. Traders at around 15 global banks conspired over email and on chat rooms to co-ordinate foreign currency trades in the $5.4trn-a-day market.

The first wave of litigation in the US gathered momentum in May when four banks, Citigroup, JP Morgan, Barclays and RBS, pleaded guilty to conspiring to manipulate the rate between 2007 and 2013.

The prospect of forex related litigation in the UK will add to the growing sum of fines and disputes costs paid out by big UK banks since the financial crisis, currently understood to top £30bn.

Barclays has already topped forex spend among UK banks as it set aside an extra £800m at the start of 2015 to cover subsequent investigations and litigation. The bank has set aside £2.1bn in total for potential and ongoing forex invetigations.