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US probe delays Barclays forex settlement

Barclays Bank
Adam Jeffery | CNBC

A New York banking regulator's probe of Barclays' foreign exchange trading business is holding up a settlement of currency rate-rigging allegations that other US and UK authorities are close to resolving, people familiar with the case said.

New York's Department of Financial Services is not a part of the bank's settlement talks with the UK's Financial Conduct Authority, the US Department of Justice and the US Commodity Futures Trading Commission, these people said.

Without the DFS in the latest settlement talks, Barclays is likely to be reluctant to resolve the case with the other agencies in a separate deal, they said, adding that a settlement was not imminent.

Barclays has been hoping to resolve the forex probe with all of the authorities investigating the issue in one deal. It pulled out of a broad settlement last year at the last minute because the DFS was not part of the agreement.

Barclays is in talks to pay a total of less than £1bn to the three US and UK agencies to settle allegations that the bank manipulated foreign exchange markets, the people added.

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But the DFS probe is taking longer because the New York regulator is investigating whether algorithms discovered on Barclays' forex trading platform helped the bank manipulate currency markets, the people said.

Deutsche Bank is also being reviewed by the DFS over the algorithm issue, which could lead to bigger penalties by the agency if it can show that the German and UK banks had systemic problems in their forex business, as opposed to rogue traders being responsible for the wrongdoing.

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The DFS has also sent subpoenas to BNP, Credit Suisse, Goldman Sachs and Société Générale in the rate-rigging probe.

In November, UBS, Citigroup, JPMorgan Chase, HSBC, Royal Bank of Scotland and Bank of America were fined more than $4 billion in the forex rate-rigging scandal. The FCA and the CFTC were part of that settlement, which Barclays pulled out of because the DFS was not involved.

The DoJ is also investigating several banks, which will probably result in criminal pleas and large fines.