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[NEW YORK] Barclays Plc is expected to pay at least US$100 million to settle an investigation by New York's banking regulator into whether it abused the "last look" practice on its electronic currency-trading program, according to a person briefed on the matter.
Barclays pleaded guilty in May to charges from the US Justice Department related to the rigging of foreign exchange rates and paid a total of US$2.4 billion to a variety of regulators, including New York's Department of Financial Services. The DFS received US$485 million of that sum, but stipulated that its own investigation would continue. The US$100 million settlement being discussed would resolve the "last look" issue.
Britain's second largest bank is among global lenders hardest hit by a worldwide investigation from regulators into allegations of collusion in the US$5.3 trillion-a-day currency market. While the London-based lender has reached settlements with most of the major authorities such as in the US and UK, it could still face litigation from clients.
"It would seem they're getting very close to the end of their major investigations," said Joseph Dickerson, an analyst at Jefferies International Ltd in London with a buy rating on shares. "That's outside of civil claims, which can be hard to gauge but tend to be small." The New York probe, which started a year ago, focuses on electronic-trading platforms of the biggest banks operating on foreign currency markets. It's seeking to determine whether banks abused the practice of "last looks," which allow the firms to back out of currency trades that shift against them.
In May, Citigroup Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc pleaded guilty to conspiring to manipulate the price of US dollars and euros as part of settlements with the Justice Department. UBS Group AG won immunity in the settlement in exchange for cooperating, but pleaded guilty to a wire-fraud charge stemming from a previous matter involving the fixing of interest rates.
Kerrie Ann Cohen, a spokeswoman for Barclays, declined to comment, as did Ciara Marangas, a DFS spokeswoman. News of the expected settlement was reported earlier by the Financial Times.
Barclays is facing a "high risk" of substantial costs from a probe by various regulators around the world into its 2008 capital raising from Qatari investors, as well as allegations of misconduct over the operation of its dark pool trading venue, Moody's Investors Service said on Tuesday. Costs tied to other past misconduct, including alleged currency-rigging and benchmark manipulation, are seen posing a "medium risk," it said.
The bank set aside 290 million pounds (S$629 million) in the third quarter to compensate customers who were overcharged for currency trades. Barclays Finance Director Tushar Morzaria declined to elaborate on the charge at the time, calling it a "historical item" that occurred between 2005 and 2012.