Who's afraid of a big, fat fine? Regulators need new bogeyman

London

A GUILTY plea in the United States used to strike terror into bankers' hearts. Now that four of the six banks fined US$5.6 billion by US and UK regulators on May 20 for foreign exchange (FX) market manipulation have also pleaded guilty to criminal charges, regulators will need a new bogeyman.

The market reaction on May 20 makes the point, even if leaks to the media meant that some details were priced in. Barclays, Citigroup, JPMorgan and Royal Bank of Scotland admitted culpability over currency market-rigging, and UBS has done so for the London Interbank Offered Rate (Libor). But shares in the European banks were each up more than 2 per cent. The stock of Bank of America Merrill Lynch, which made no such plea, was trading in line with its twomea culpa US peers - each down less than one per cent…