Barclays, Citigroup and Royal Bank of Scotland have frozen bonuses across swaths of their foreign exchange trading teams pending internal investigations into possible manipulation of key currency benchmarks.
The cash and share bonus suspensions are targeted on the wider team rather than just the traders under investigation, people close to the situation said.
(Read more: Forex manipulation: How itworked)
The bonuses – which can reach as much as $2m for top forex traders – will be withheld until reviews into potential wrongdoing in the banks' currencies trading units are concluded.
Those internal probes into allegations of collusion and price rigging have so far prompted the suspension, placing on leave or firing of 25 staff across 11 banks and the Bank of England.
However, legal experts report that many more traders could be under review beyond the two dozen whose fates are public, as banks seek to avoid outright suspensions by limiting the duties of certain forex staff.
The bonus freeze has affected traders in London, New York and elsewhere and stretches beyond spot trading desks – the hotspot of investigative activity so far – to derivative trading units.
The largest banks in forex typically employ several dozen traders across spot and derivative trading.
Barclays and Citi declined to comment. An RBS spokeswoman refused to speak on forex bonuses, but said: "Awards are put on hold when investigations are ongoing until all the facts are clear.
"This is normal practice and does not prejudge the outcome of a review," she added.
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The move echoes actions taken recently by RBS at its controversial Global Restructuring Group. It suspended senior staff bonuses until reviews into accusations that the unit deliberately forced companies into insolvency are completed.
Lawyers said banks are suspending bonus payments for a large number of forex traders because they think it would be unfair to single out those already on leave, given that others could still be implicated as well.
The move will fuel the frustration of currency traders globally after their business has been shaken to the core by extensive investigations by more than a dozen regulators across Europe, the US and Asia.
Bankers say trading desks have thinned out after a flood of departures and the remaining traders are hamstrung and unwilling to take risks for fear they could breach rules.
Forex traders' bonuses are expected to have fallen across the board this year after a dismal 2013 in which revenues of the largest investment banks have dropped by 9 percent, according to Coalition, a research group.
(Read more: Banks brace for billion-dollar forex probe)
This comes as the banks investigating whether their traders rigged forex benchmarks are increasingly choosing not to suspend or sack them, but instead opting for a "third way" known as personal leave or exclusion, employment lawyers report.
The advantage to the bank is that if it suspends a trader it must keep him or her appraised of the status of any internal investigation. If he or she is found not to have committed any wrongdoing it can also take longer to put the trader back to work, legal experts said.
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