South Africa’s ruling ANC party called on Thursday for the toughest possible sanctions against more than a dozen local and foreign banks accused of rigging the rand currency, piling political pressure on lenders that have become a target for public anger.
The Competition Commission said on Wednesday it had found the banks, including U.S., European, Japanese and Australian lenders, had colluded to coordinate their trading activities when dealing in the rand and U.S. dollar.
South Africa’s banking index fell 1 percent on Thursday after the Commission, which has been conducting an investigation since April 2015, recommended heavy fines be imposed on the lenders.
The ANC attacked the banks, which many South Africans view as a symbol of the stark racial inequality that persists 23 years after the fall of apartheid.
“The African National Congress takes an extremely dim view of the activities of the listed banks. These acts of corruption have crudely exposed the ethical crisis in the South African banking sector,” the party said in a statement.
“It is further an indication of how the markets are and can be manipulated by dominant oligopolies to cripple its functioning to suit their nefarious agendas.”
Financial regulators are clamping down worldwide, with dozens of traders fired and big banks fined around $10 billion in total in separate cases for rigging the level of the Libor interest rates and other market benchmarks.
The opposition Democratic Alliance accused the ANC of politicising the issue, saying ministers want “to do battle with the banks, regardless of the economic fallout”.
Michael Cardo, who speaks on economic development for the right-leaning party, said President Jacob Zuma’s State of the Nation Address last week had made clear “he intends using the competition authorities as a tool of his populist and destructive agenda of ‘radical economic transformation'”.
Last year the ANC suffered its worst ever local election performance as the left-wing Economic Freedom Fighters (EFF) won over many poor black South Africans with promises of radical redistribution of wealth.
The EFF and sections of the ANC often criticise banks for keeping the wealth of the country in the hands of the white elite. This has turned up the heat on the banks, where a majority of executives are white despite black people making up 80 percent of the population.
The investigation found that from at least 2007, banks had an agreement to collude on prices for bids, offers and bid-offer spreads for spot trades involving the rand – whose international market code is ZAR – and the U.S. dollar, the Commission said.
Its inquiry centred on an instant messaging chat room called “ZAR Domination”, which the Commission said was used to coordinate trading activities when giving quotes to customers who buy or sell currencies.
Fines should amount to 10 percent of the banks’ annual revenues, the Commission recommended, without saying whether this should relate to global revenues or just their South African business.
The banks and brokerages named in the case were Citigroup, Nomura, Standard Bank, Investec, JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank AG, Standard New York Securities Inc, Macquarie Bank, Bank of America Merrill Lynch (BAML), ANZ Banking Group Ltd, Standard Chartered Plc and Barclays Africa (Absa), part of the Barclays Plc.
Investec and Barclays both said they would cooperate with the probe while Standard Bank, BAML, Nomura, Credit Suisse, ANZ and Standard Chartered declined comment. The others have yet to comment.
Source: Reuters
