Based on calculations that indicates that the country’s biggest bank made around R515 billion in profit between 2007 and 2014, The Times is reporting that the bank may just have to fork out a staggering R51 billion for its role in the scandal.
Absa – who the Competition Commission on Wednesday implicated among 16 other local and international banks involved in a foreign exchange price fixing ring that operated over a period of seven years, as well as Citigroup, will however reportedly be exempt from paying penalties because it co-operated with the Commission’s investigation.
The Commission identified among others the Bank of America Merril Lynch, HSBC, BNP Paribas SA, Credit Suisse , JP Morgan and Nomura as those who participated in price fixing and market allocation in the trading of forex currency pairs involving the rand.
“The respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times,” the Competition Commission said in a statement earlier this week.
“They assisted each other to reach the desired prices by coordinating trading times. They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.”
The timing of the investigation has come under scrutiny as it comes amid a time that the country’s major banks are at odds with the government over their decision to cut ties with Gupta-owned companies.
It also plays perfectly into President Jacob Zuma’s drive for radical economic transformation, which includes bringing an end to white capital monopoly which the banks traditionally represent.
“The timing couldn’t be worse for the banks. It comes at a time when they’re trying to demonstrate their impeccable behaviour. It makes a case for intervention,” Citadel Investments Service chief strategist Adrian Saville was quoted saying in the report.
The National Treasury has also come out in harsh criticism of the banks, in a statement saying: “If proven to be true, it would confirm the pervasiveness of unbridled greed within the ranks of the forex trading sections of the banks.”