Three of South Africa’s biggest banks – Standard Bank‚ Absa and Investec – and 14 international banks have been referred to the competition tribunal for price fixing.
They are accused by the Competition Commission of manipulating the price of the rand when selling and buying dollars through fictitious buy and sell orders to change supply of the currency.
They are also accused of using trading chat rooms to co-ordinate times for the sale of rands or stop selling for a time in order to manipulate prices from 2007.
“This is a big deal‚” said market commentator and trader Simon Brown.
He said it was a major announcement because “our Competition Commission[ers] are good at what they do”.
He also said the rand affected the petrol price and this is also why accusations of manipulating currency have implications and huge interest for South Africans.
The commission said in a press release yesterday afternoon that it was “seeking an order from the tribunal declaring that the respondents have contravened the Competition Act”.
It is “seeking an order declaring that the Bank of America, Merrill Lynch International Limited‚ BNP Paribas‚ JP Morgan Chase & Co‚ JP Morgan Chase Bank N.A‚ Investec Ltd‚ Standard New York Securities Inc‚ HSBC Bank Plc‚ Standard Chartered Bank‚ Credit Suisse Group; Standard Bank of South Africa Ltd‚ Commerzbank AG; Australia and New Zealand Banking Group Limited‚ Nomura International Plc and Macquarie Bank Limited are liable for the payment of an administrative penalty equal to 10% of their annual turnover”.
Of the three South African banks in the spotlight‚ it appears Absa may escape prosecution and fines because of its co-operation with the commission.
While neither Standard Bank nor Investec had responded to the announcement by yesterday evening‚ Absa issued a brief comment that it would “continue to cooperate” with the commission during the prosecution.
“It should be noted that the Competition Commission has not sought any penalties against Absa,” it said.
Brown said: “That list of banks involved is so long‚ one almost asks ‘who is not the list?’”
He said banking scandals had become common globally.
“We have seen so many of them‚ with accusations of banks manipulating the gold price and Libor rates in Britain. There is a lot of dodgy stuff.”
Libor, or London Interbank Offered Rate, is a benchmark rate that some of the world’s leading banks charge each other for short-term loans and is used to calculate interest rates on loans around the world.
Banks never admit they were wrong but pay large non-admission of guilt fines‚ said Brown.
Share prices for the three local banks barely moved after the announcement.
Brown said this may be partly because the investigation by the tribunal would take a long time.
“I am expecting a Twitter storm. The banks are under huge pressure in South Africa.”
Most foreign banks had local financial assets and offices that could be attached if they were eventually fined, making it not so easy to ignore local competition authorities. — Tiso Black Star Group