Citigroup Inc (C) Haunted By Foreign Exchange Scandal, Fines Exceed $1 Billion

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It looks like the legal nightmares are nowhere near their end for Citigroup Inc (NYSE:C), as the financial institution agreed to pay up to $1.02 billion to settle the foreign exchange rate scandal. Citibank is not the only bank involved in the probe and other banks are likely to come up with similar settlements in near future.

As a part of the prime felons in the foreign exchange probe, Citigroup announced settlements yesterday. The bank said,

“Citi acted quickly upon becoming aware of issues in our foreign exchange business … monitoring processes to better guard against improper behavior.”

Two government bodies including the Financial Conduct Authority of United Kingdom and the U.S. Commodity Futures Trading Commission are involved in the investigation.

Both the government authorities announced settlement for $3.3 billion with three major banks out of which, UBS AG (NYSE:UBS) will pay the lion’s share of $800 million. JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc (NYSE:C) will pay $350 million each for the separate OCC fine posed in the matter. Bank of America Corp (NYSE:BAC) will pay $250 million as its share of the OCC fine.

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After the settlement, Tim Massad, CFTC chairman, said,

“Today’s enforcement action should be seen as a message to all market participants that wrongdoing and foul play in the financial markets is unacceptable and will not be tolerated.”

The FTC released a similar statement after the announcement.

Royal Bank of Scotland Group PLC (NYSE:RBS), HSBC Holdings plc (ADR) (NYSE:HSBC), and Barclays PLC (ADR) (NYSE:BCS) are among the other financial institutions involved in the matter.

Earlier last month, Citigroup Inc (NYSE:C) announced additional $600 million for its legal expenditure during the quarter. The shares of the bank are trading at $53.42 with current P/E ratio of 18.74. There was a slight weakness in shares after the settlement announcement and OCC fine.

This article has been written by Prakash Pandey.

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