Looks like settlements in forex manipulation fiasco might be an order of magnitude higher – hard to keep track of the estimates

Anyone else having trouble keeping track of the rumors on the forex settlement talks?

Previously discussed that a few too-big-to-fail/jail/manage banks might have fines in the range of $0.5 to $1.0 billion apiece. Looks like the rumors of settlement amounts were off a lot.

A few articles that leave me scratching my head:

9/26 – Financial Times – Six banks in UK talks over forex manipulation fines Total fines in UK for six banks could be £1.5B, or around $2.5B. That would be in England only.

Next stop:

11/3 – Bloomberg – JPMorgan Faces U.S. Criminal Probe Into Currency Trading – Article says JPM said in their quarterly filing that their fine for forex fiasco could be $5.9B.

Just so you know I know that six billion US dollars is the actual number, the article says that is an increase of $1.3B since their June estimate. I reread the article several times. Yup. $6 billion, JPM only, just the forex investigation, world-wide fines.

That left me scratching my head.

Did a moment of research and found this, which was discussed in several other on-line articles:

10/21 – Bloomberg – Forex-Rigging Fines Could Hit $41 Billion Globally: Citi  – Citigroup made that estimate for the total settlement for all banks with all regulators. It is a string of guesses and assumptions, but is just as good as anyone else’s guesses.

Their guess is $6.5B for Deutsche Bank, $4.8B for Barclays, $4.6B for UBS. Yes, billions. Yes, US dollars.

Extrapolation (actually guesses) is from comment that U.K. Financial Conduct Authority expects to levy about £1.8B of fines for certain banks.

Citibank is estimating the total U.K. fines could be $6.7B, with another $6.5B from other European regulators. Fines from the U.S. could be $28.2B on top of that $13.2B. That gets to $41.4B for all banks and all regulators.

With the new perspective provided by Sam Antar, that would be a pretty good haul for the regulators. A year or so of effort with forty billion return for their trouble. Funding for the windfall to their respective governments is provided by the stockholders.

Is time for an office pool, since the World Series is over and it’s too early for Superbowl?

Almost seems like we should have an office pool – put down $5 and pick a box with settlement month and total billions of fines (in 4 billion dollar increments).

What square would you pick? I’ll go for February and $33B-36B.

Update: 11/4 WSJ -J. P. Morgan Faces Forex Probe (article doesn’t seem to be available online)- Turns out that $5.9B reserve for JPM is the total of all their litigation reserves, not just for the forex fiasco.

Like already said, it is hard to keep track of all the financial disasters.

Leave a Comment

Your email address will not be published. Required fields are marked *