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Barclays said to face US fine for breaching libor settlement

Friday, May 15, 2015 - 08:12
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Barclays Plc will probably be fined for violating a three-year-old settlement over interest-rate rigging and US prosecutors will stop short of seeking a guilty plea, people familiar with the matter said.

[LONDON] Barclays Plc will probably be fined for violating a three-year-old settlement over interest-rate rigging and US prosecutors will stop short of seeking a guilty plea, people familiar with the matter said.

The fine would come on top of a penalty that the Justice Department is poised to announce in coming days when it resolves a probe of Barclays and four other banks for manipulating currency benchmarks, said three people, who asked not to be named because the decision isn't final.

The size of the fine isn't clear but as of a few weeks ago was around US$60 million, one of the people said. Negotiations are continuing and the terms and penalty amounts could change, the people said.

Kerrie Cohen, a spokeswoman for Barclays in New York, and Peter Carr of the Justice Department declined to comment.

Barclays would be the second bank to be penalized by the Justice Department for breaking earlier vows of good behavior as prosecutors pursue settlements against five firms over allegations they rigged currency trades. Official announcements are likely to be made next week, people familiar with the timing have said.

UBS Group AG will probably plead guilty to charges related to its settlement over rigging the London interbank offered rate, or Libor, a person familiar with the matter has said. The plea result from UBS's admission that it participated in fixing currency benchmarks, which would violate a 2012 agreement with the Justice Department not to commit more crimes.

NO CHARGES

Barclays, the UK's second-largest bank by assets, had a similar non-prosecution agreement over Libor. It isn't clear why a violation of the agreement would trigger fines but not charges.

Barclays is expected to plead guilty to currency-rigging charges along with Citigroup Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Plc, people familiar with the matter have told Bloomberg News.

As part of next week's settlement, Barclays is likely to pay fines and penalties of more than US$1 billion to the Justice Department, the UK's Financial Conduct Authority and New York's Department of Financial Services, people familiar with the matter have said.

The Justice Department's criminal chief signaled she was ready to charge banks for previous conduct if they violate criminal settlements - a first for the financial industry - in a March speech.

"Where a bank that violates a DPA or NPA is a repeat offender with a history of misconduct, or where a violating bank fails to cooperate with an investigation or drags its feet, that bank will face criminal consequences for its breach of the agreement," Assistant Attorney General Leslie Caldwell said at an anti-money-laundering conference in Florida.

Libor Agreement Barclays agreed to pay US$452.3 million in June 2012 to the Justice Department, the Commodity Futures Trading Commission and the U.K.'s Financial Services Authority, predecessor to the Financial Conduct Authority, to resolve allegations it rigged Libor rates.

The Justice Department didn't charge the firm as Barclays vowed to not commit criminal acts.

For Barclays, an additional Libor fine would be the latest twist in a long-running attempt to resolve legal problems related to currency trading.

In November, the bank backed out of a settlement with the UK's FCA after Benjamin Lawsky, the New York bank regulator that holds Barclays's license to operate in the US, refused to sign on. Mr Lawsky then announced his own investigation into electronic currency trading at Barclays, Deutsche Bank AG and other firms licensed to operate in New York.

Mr Lawsky said last month that he's willing to join the Justice Department settlement with Barclays over currency manipulation as long as the bank agrees to keep cooperating with his probe.

BLOOMBERG