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Competition court: Global banks can be fined in SA over alleged rate rigging

The watchdog is seeking to fine 23 local and foreign banks that it alleges colluded when giving quotes to customers buying or selling the rand and the dollar.

A picture taken on 3 May 2017 in Zurich shows the logo of branch of Swiss banking group Credit Suisse. Picture: AFP

JOHANNESBURG - South Africa’s Competition Appeal Court has overturned a decision that a host of international banks cannot be fined if found guilty for alleged exchange rate rigging, the country’s Competition Commission said on Friday.

The watchdog has been investigating the case since 2015, but when it tried to bring charges against the banks last year South Africa’s Competition Tribunal said that banks without a presence in South Africa could not be fined, though they could be declared anti-competitive if the commission could prove their case.

The banks, including Bank of America Merrill Lynch, JP Morgan, and Credit Suisse, and the commission appealed that decision, with the banks arguing that there was no jurisdiction for even a declaratory order to be handed down.

But the appeals court dismissed the banks’ application with costs and upheld the commission’s appeal, ruling that the banks could in fact be fined, the commission said as it welcomed the decision.

“The CAC said, within 40 days, the Commission must file a new (charge sheet)... and must set out the facts it relies on to allege it was foreseeable that the alleged conduct would have direct or immediate, and substantial effect in South Africa,” the commission’s statement said.

The watchdog is seeking to fine 23 local and foreign banks that it alleges colluded when giving quotes to customers buying or selling the rand and the dollar.

Its investigation came during a global clampdown that has led to dozens of traders being fired and several big banks fined around $10 billion in total for rigging the level of Libor and other forex benchmarks.

The foreign banks it has investigated that have no presence in South Africa are Bank of America Merrill Lynch International, JP Morgan Chase & Co, Australia and New Zealand Bank Ltd, Standard New York Securities Inc, Nomura International PLC, Macquarie Bank Ltd, HBC Bank USA, National Association, Merrill Lynch Pierce Fenner and Smith and Credit Suisse Securities (USA) LLC.

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