FX rate fixing scandal could be worse than Libor
There is a good chance that an investigation into whether traders at some world's top banks manipulated foreign exchange markets could be worse than the Libor scandal for banks. Royal Bank of Scotland chief executive, Ross McEwan, has said in an interview on Friday.
When asked in an interview with the U.K.'s LBC radio if the investigation into foreign exchange rate-fixing would be more expensive than the rate-fixing or insurance mis-selling scandals, the RBS boss answered "unfortunately it has the hallmarks".
The manipulation of Libor, or the London InterBank Offered Rate -- a key interest rate used by banks for short-term lending to other institutions -- led to record fines being levied on several majors banks in Europe, including Barclays and Deutsche Bank.
Similarly the PPI scandal, which stands for payment protection insurance scandal, involved banks mis-selling insurance to their customers, which led to a compensation bill of around $34 billion for its banking industry.
McEwan went on to say: "I have the feeling that this is a sort of [the] Libor case again ... The difference this time is that we haven't sat back and denied it. We've gone into it and are doing the investigation hand-in-hand with the authorities."
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His comments come as U.S. regulators have issued record fines for misconduct on a number of big-name banks -- including $7 billion settlement with Citi group earlier this week.
McEwan also alluded to the several investigations and issues around misconduct continuing until 2016.
"There are a number of litigation and conduct issues that we are still having to grapple with that will come out over the next 18 months," McEwan told LBC.
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Last year, regulators in the U.S., Europe and Asia began an investigation into possible trader collusion in the $5 trillion-a-day foreign exchange market.
It is believed that traders colluded in chat rooms to manipulate foreign exchange market benchmarks at the expense of their clients.
The investigation has grown to include many of the world's major banks, potentially hundreds of traders as well as the Bank of England, which it is alleged knew about the trading actions in question.
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