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3 South African banks face massive fines for price-fixing and collusion

3 South African banks face massive fines for price-fixing and collusion

Three South African banks have been implicated among 17 banking groups in ‘widespread’ collusion relating to the the price-fixing of the rand.

Following an almost two-year investigation into the matter, the Competition Commission has now referred a collusion case to the Competition Tribunal for prosecution.

According to the Competition Commission, it has been investigating the matter since April 2015. The investigation looked at cases of price fixing and market allocation in the trading of foreign currency pairs involving the rand.

In mid-2015, when the investigation kicked off, Competition Commissioner Tembinkosi Bonakele said that the collusion was widespread, and happened very “casually” through electronic platforms, such as group chats.

Reuters reported that the banks used an instant messaging chat room called “ZAR Domination”, to coordinate their trading activities when giving quotes to customers who buy or sell currencies.

ZAR is the code for the South African rand used in financial markets.

It has been alleged that currency traders have been buying and selling US dollars in exchange for the rand at fixed prices. This was accomplished by making false sales to drive up demand, or colluding to agree not to trade for specified periods of time.

What sparked the local investigation is still unknown, however it followed several international investigations where prominent banking groups were brought to book for price-fixing, and were made to pay fines or settlements.

In South Africa’s case, the Commission is seeking an order declaring that the 17 banks are liable for the payment of an administrative penalty equal to 10% of their annual turnover.

“The referral of this matter to the Tribunal marks a key milestone in this case as it now affords the banks an opportunity to answer for themselves‚” said the commissioner, Tembinkosi Bonakele.

The 17 banks implicated include:

  • Bank of America Merrill Lynch International
  • BNP Paribas
  • JP Morgan Chase & Co
  • JP Morgan Chase Bank
  • Investec
  • Standard New York Securities
  • HSBC Bank
  • Standard Chartered Bank
  • Credit Suisse Group
  • Standard Bank of South Africa
  • Commerzbank AG
  • Australia and New Zealand Banking Group
  • Nomura International
  • Macquarie Bank
  • ABSA Bank Limited (ABSA)
  • Barclays Capital
  • Barclays Bank

Read: R500,000 fine or 10 years in jail for collusion and price-fixing in SA

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  • victory

    ABSA again?

  • kid black

    They are scratching at the feet of the global banking cartel. Not a good idea.

  • Frik De Wet

    Oh great. Just another justification the ANC needs to ‘radically transform’ the banking sector. IE – make it the next SAA or SABC.

    • victory

      To your understanding it is a banks rights to fix prices?. .shame to be u

      • A.A

        My question is, who gets the 10%???

        • victory

          Can u plz direct your Question to the thieves

        • Kagiso

          Brian Gupta, the new Finmin. Lord help us.

      • Frik De Wet

        Who said that? Read the article carefully. They were in collusion on price fixing relating to foreign currency exchange. 99% of SA bank customers never travel abroad or will buy foreign currency. Therefore this was deplorable, but didnt have implications to the vast majority of the banking clients.

        This is why we have a competition commission. Fine them. Bring the guilty parties to book. But this is not a reason to turn the banks into another banana republic state owned enterprise

        • Ecthelion

          “Fine them. Bring the guilty parties to book.”

          No, that would be merely treating the symptom and not the cause. The cause for this (and what happened in the bread and construction saga) is the existence of an oligopoly. Banks need to be broken up, made smaller to allow for more competition and to make it harder for them to collude with each other.

          Maintaining the status quo is not an option

          • Frik De Wet

            Have you heard of Capitec? They have grown from nothing to an R83 billion market cap in under 10 years. They are shaking the market up by having low fee accounts, extended trading hours, banking on sundays and really affordable and barebones banking.

            Do you know how many banks operate in South Africa? Over 50!!.

            No one forces you to bank with the big 4. The big 4 doesn’t offer you anything that other banks don’t.

            There is already huge competition in the markets. Heck, even Discovery is applying for a banking license, and knowing the company, they will be offering some real revolutionary products and will make the landscape even more competitive.

            Telkom has a landline monopoly. Our cell providers are like an Oligopoly. But our banks certainly do not have any monopoly, and competition is fierce amongst them. You could perhaps make that argument 20 years ago, but things have radically changed already – to the benefit of the consumer.

          • Ecthelion

            How much overdraft has Capitec offered you lately? Oh’s sorry, that’s right, they don’t have one. And how are their home loan rates? Oh sorry they don’t have that either.

            Anyone can open a company, offer a couple of banking services and then call themselves a bank. Other offer only investment services and they are also called a bank. African bank offered only loans and called themselves a bank. But we all know there are only really 4 or 5 full service banks – and many of the smaller banks leverage off these larger banks. And in that they are a oligopoly. Just like in the cell industry. There is virgin mobile, FNB connect and a whole lot of other “providers” but all of them are actually leaning on the same 3 or 4 companies to provide the base service.

            So there is only the appearance of competition but there is an underlying lack of competition. And until such time as that is sorted out we will keep having cases popping up of collusion or corruption.

          • Frik De Wet

            Fair enough, I can respect your viewpoint. But with 4 huge and 6 large banks I personally dont view it as a monopoly. Especially considering all of them offer really low cost banking products. We are spoiled for choice. I have traveled abroad, and whilst I find EU banking to be simpler and more transparent with fees, I dont find them any less expensive, neither do they offer better service.

            Now the cell providers are a different story. Knowing full well the exorbitant data charges we pay, more than other dirty poor african countries. Also considering the dropped calls and poor coverage, you are basically forced to stick to Vodacom or MTN. No choice whatsoever. The banking system in comparison is much more competitive and open.

          • Ecthelion

            What you also need to keep in mind is that allowing the existence of such large and powerful banks in SA opens us up to a situation where they become too big to fail. That means if somethings hits them hard (often due to their unethical business practices) then you and I will have to bail them out because even if only two of them fail it will be a huge hit to the South African economy. Therefore keeping banks small and many is in our long-term best interests for many reasons.

          • Frik De Wet

            Sorry, disagree with you again. We have some of the strictest banking regulation in the world. We also have completely separate entities for retail and investment banking, unlike US banks. The toxic investment derivatives that led to many other bank failures, were being mixed in with regular retail banking. Essentially using your clients money for speculation and betting.

            This was so well exemplified when in 2008 the worst financial crisis in 100 years hit the globe. Some major A listers went bankrupt in the USA, along with a nice share of 700 BILLION USD bailouts for banks. It spread across the global and European banks needed bailouts in the hundreds of billions. Many failed. Many simply ran out of money.

            SA Banks didn’t need one cent of tax payers money for bailouts. Partially it was due to their strict regulation, but also because of their size and being well capitalized.

            If that isn’t a testament to the strength of our banking sector, then I don’t know what is.

          • disqus_8JVZTtNOj3

            Ah, but the greatest sin of the banks was when they denied to do business with the Guptas, Interestingly there. is a sudden upsurge of anti-bank activity to cover this fact.

          • Brian

            Exactly!! It was mainly because they were allowed to use depositors money for speculation. SA banks cant do that. Breaking up the banks is more of a USA problem. Our SA banks at tiny compared to the USA banks and if we make them too small they become inefficient and uncompetitive internationally.

          • 小杜 (xiao du)

            SA Taxpayers paid plenty in bailouts over the years;
            The major one was that BankCorp was bailed out. Hence the ABSA pay back the money bogosity. If anyone needed to pay anything back it was SANLAM, but thats beside the point.

            No, we didn’t have a crisis in 2008, mostly as we lost all the weak banks 10 years prior to that in amalgamations and closures.

          • disqus_8JVZTtNOj3

            Ah, is this the black monopoly capital?

          • Kagiso

            You’ve made your point very well. People are just reacting because this is perfect bait in the current political climate. The ANC doesn’t have the teeth or the the brains to shake up the banking sector. They need it to keep working so they can continue milking the state coffers. Fines are sufficient for the banks and heads will roll.

            Personally I laugh at the idea of a state owned bank. It would lose its licence on day 2.

          • Brian

            Exactly!! Well said. The trouble with state owned banks is, firstly, that it makes the politicians even more powerful. They then own legislation and the economy. Far too much power in the hands of too few and corruption will flourish.

            Secondly, when the state bank fails (as I have no doubt it will do looking at current SOE’s), then it will be the tax payer who has to bail them out. That means taxes go up and investment goes down which in turn means less jobs and more poverty.

            Another point is that any change made in terms of nationalization will be in effect when the next party takes over SA and not just while the ANC is in power. What will they be like?

          • 小杜 (xiao du)

            SA doesn’t have depositors insurance, so its more likely that the politicians and other BEE thieves bleed the bank dry, and the depositors get nothing.

            Prime example of this – Transnet’s pension scheme where 80 billion was stolen.

        • Zed Shabs

          You are very misinfomed sir, do you know that the country imports a lot of raw material? It does have a serious impact on the manufacturing industry and this will directly have negative impact on everyone

        • Except that the exchange rates pump up everything from the price of petrol to imported foodstuffs. Once the imported price goes up the local manufacturers take that as a signal to raise their own prices “to compensate”.

        • Robert Dixon

          If the alleged behaviour resulted in the Rand being valued lower than it should then ALL in SA feel the effects.
          Think about this the next time you buy fuel for your vehicle!

    • Asemahle Mdlalana

      Your Hate For the ANC has blinded you.

      • Frik De Wet

        Blinded me to what? Every single state owned enterprise is a complete and utter disaster. The ANC is incapable of running anything efficiently and competently. They have proven this time and again.

        Our banks are on par and in some instances ahead of many first world developed nations. The sector is still a shining beacon of stability and is amongst the most modern and developed in the world. How about we just give credit where its due, and leave them to flourish, instead of the ANC barging through the door and applying their failed recipe for disaster.

        • Asemahle Mdlalana

          The issue at stake is not about ANC ,We all know woes of the government. You cant be giving credits to corrupt banks.

          • Frik De Wet

            Who said I was. Read my comments slowly and carefully. The behavior is deplorable. I expect heavy fines and heads to roll. There needs to be accountability.

            But the timing here is 2 days after Zuma announced he wants to ‘radically transform’ the banks. So it is indeed about the ANC, because this will be used as justification to proceed with their ill informed strategy.

          • Jeffery Stokes

            Yes the anc is the problem. But thanks for your 5c opinion.

          • disqus_8JVZTtNOj3

            If the banks were to suddenly be willing to do business with the Guptas, all would be forgiven thanks to some fabricated “facts”.

        • l0cal_user

          Not related, didnt read ahead of this comment… but I would argue that the ANC’s recipe for disaster is not a failure at all – but rather incredibly successful. I cannot think of a single thing they have not already destroyed or are in the process of destroying – its really quite effective.

      • lerumo

        That’s what I’ve realized with the 1652s, Even when it’s their brethren robbing South Africa of billions they find a way to blame the ANC

    • Archerbald

      Lol. How nice to blame the ANC now. When all along it was your white uncle.

  • GetRich Fast

    Please prosecute the bastards. Send them to jail. They committed fraud.

  • Ray Mulder

    These banks are all owned by Zionists, who’s sole purpose is to control the world via money. They do that so well that most of the people in this world are completely ignorant of the fact that their entire lives are being run by these criminals…

    • disqus_8JVZTtNOj3

      Ray, you are the only one who dares to say that. You apparently read European history or even the book of Wise Men (substitute the correct title here). You may be too well informed.

      • Ray Mulder

        If you know truth it is your duty to inform those who want to listen…else you are as guilty as they are…fear is just another ignorant illusion 🙂

        • disqus_8JVZTtNOj3

          ray, my response to your latest comment was summarily deleted.
          See I told you.

      • Hennie

        You are really funny.

  • l0cal_user

    Swak, can we spare a minute, a moment of silence even, to consider the feelings of FNB and Nedbank who were not invited to the chat group.It sucks to only find out about a party after its over, and sucks even more find out that it was so good it lasted for years. Poor buggers.

    • Kagiso

      While the chat rooms were steaming up FNB was stealing customers and building solid online and mobile experiences. I don’t know about Nedbank though I think it’s geriatric bank.

  • Ndere

    Do you know who is going to be charged that 10% ??? Not the banks , it’s the old granny who has her savings in Absa… I don’t understand why banks charge , bank charges . The same banks operating in UK don’t charge any bank charges .It’s time we scrap the bank charges

  • TheRock

    The banks collude with each other all the time to affect currency rates by trading massive volumes at the same time against normal economic indicators, to make billions of dollars in forex trading to the detriment of the individuals who are trading using economic indicators, and suddenly, the rates go against the normal indicators due to banks collusion affecting the rates, causing the individuals who are trading honestly to lose a lot of money. Investigation into banks collusion happens every couple of years, the banks then are required to pay a fine of 10% of their turnover, which they do with a big smile on their faces, and carry on doing the same, and in a couple of years later, another 10% fine, etc, etc, but they get to keep 90% of the money they made by these illegal collusions. It’s like a bank robber, who steals a million bucks from a bank, and when caught he is required to pay a fine of 10% of what he stole, but he can keep the other 90%… the only way to stop this is for the CEO’s of these banks doing JAIL time for collusion, but the governments are very must part of the collusion process, by also cashing in on 10% of the banks illegal profits, so government doesn’t really want the banks to stop this procedure.

  • djza

    What is the point of charging a penalty that is going to be paid by the banks’ customers anyway? Rather force them to give the customers a 10% discount on turnover for the year.

    • In order to give customers a 10% discount, they would first increase their charges by 20%.

  • bengine

    I am shocked … shocked.
    This caught me totally by surprise.
    Funny thing is – if you had mentioned this 12 months ago you would have been called a “conspiracy theorist” by the peanut gallery.

    • 小杜 (xiao du)

      It was in the news 2 years ago, so no-one would have been shocked 12 months ago, other than rehashing old news, which is what this is.
      This first appeared in March 2015. SARB wasn’t too bothered about it even then.
      (Just to clarify, I know you’re being sarcastic, apologies for the truthful answer 🙂 )

      • bengine

        There are people that know what is going on and there are those that read the papers and then make derogatory remarks about the former – this was a bit of a dig at the latter.

  • Khalsa S

    Hefty fines are needed….. the biggest protection we consumers have is competition.
    Without fair competition we will end up as slaves.

  • Peter the Observer

    These institutions have posted exorbitant profits and paid bonuses to trading staff on this. All of this on the backs of people and the poor in their s country and somehow this is deemed honorable……. a very big mark on ethics, governance and law abiding institutions here ??? How come we don’t here about firings and mass resignations and fines from these institutions??? Is this one big dog and pony show for public consumption??

  • Sign of the times, perhaps?
    In the UK, the same thing was found and cleaned out about 3 years ago. The SA Competition Commission has only just found out?

  • BallsToTheWall

    A conspiracy theory:
    The banks may indeed be guilty – but – it just feels like a Gupta hand is being dealt here…I was wondering how the other banks may face the wrath of closing the Gupta’s bank accounts.

    Just FNB is left in the wild. Lets see what revenge get’s thrown their way

    • TellMe

      Imagine that… FNB is also the bank the ANC uses last time I checked.

    • Kagiso

      The same banks have been fined offshore though. Arrests have been made in the UK. I think it’s convenient timing but I also think it’s just a stroke of luck for the WMC crowd on twitter. Practically speaking, the ANC don’t actually have the brains to make a meal of the situation. There will be plenty of noise but no new Gupta accounts will be opened.

  • dv8ed1

    At least FNB isn’t part of this #dankievader

    • Beans

      I wonder how they skipped this, as their interest rate on loans and credit cards is the highest of the lot.

      • dv8ed1

        Well they mos charge so much h that they dnt need to collude haha

  • Ernst Marais

    At the end of the day the fines will become part of the bank’s cost resulting in higher fees.
    The Government gets more money to waste and the bank’s customer (you and me) end up paying for it all.

  • Bill

    There should have never been bank charges, the good old days never had bank charges, they use our monies for investment and then charge us on top of that, the poorest is suffering the most from these charges.

    • brz

      I agree. I wish somebody can explain in simple terms why that happened.

  • Archerbald

    So Zuma didn’t necessarily affect the rand.

    A bunch of white supremacists did.

    Well done, to all the commentators with their racist assumptions.

    • disqus_8JVZTtNOj3

      Archerbald: Are you saying that firing Nene was used by the banks to drive the rand low? Are you saying that the same thing will happen if he fires Gordhan?
      Are you saying that the possible downgrading of SA to junk level is also engineered by the banks to discourage foreign investment in SA?

      • Archerbald


        I’m saying that where certain situations might not have caused the rand to drop, the thug bankers used that as an opportunity to artificially devalue the rand.

  • chacma

    some lawyers are going to get very rich on this one

  • the-TRUTH

    Although I suspect the ANC is trying to gain political points from this banks scandal, let me have my say: “Bloody greedy banks, #paybackthemoney”
    Yes yes please punish these greedy bastards…
    and as for ANComrades and their shady friends, shut the hell up. Why are you not making noise about the anti-competitive conducts of SAA? Tsk, #2019ANCMustFall

  • 小杜 (xiao du)

    The discussion about it here seems to think its more talk than reality, and that makes more sense, especially since the SARB wasn’t too peturbed about it – www dot rollingalpha dot com/2015/05/21/rand-exchange-rate-fixing-less-exciting-than-it-sounds-i-reckon/

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