Rand Price Fixing Allegations: Top Three SA Banks To Face Prosecution

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Top three SA banks and many foreign-owned banks have been referred to the Competition Tribunal for price fixing.

The top three SA banks which include Standard Bank of South Africa Ltd‚ Absa and Investec are to face prosecution as they were accused by the Competition Commission of manipulating the price of the rand when selling and buying dollars- through making fictitious orders to buy and sell rand to change the supply of the currency.

The banks are equally accused of using trading chat rooms to co-ordinate times for the sale of rand or stop selling for a time in order to manipulate prices from 2007.

The Commission said on Wednesday at a press review, that it was “seeking an order from the Tribunal declaring that the three banks have contravened the Competition Act” and thus must be penalized.

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Other banks roped in the case including Bank of America Merrill Lynch International Limited‚ BNP Paribas‚ JP Morgan Chase & Co‚ JP Morgan Chase Bank N.A‚ Standard New York Securities Inc.‚ HSBC Bank Plc‚ Standard Chartered Bank‚ Credit Suisse Group;  Commerzbank AG; Australia and New Zealand Banking Group Limited‚ Nomura International Plc.‚ Macquarie Bank Limited are liable for the payment of an administrative penalty equal to 10% of their annual turnover.

Reacting to the tribunal case levied against the top three SA banks, market commentator and trader Simon Brown said the case is really a “big deal” and that it was a major offence because “our Competition Commission are good at what they do“.

When it comes to price fixing‚ “they are not often wrong on everything from bread to bicycles“ Brown said, adding that the rand affected petrol price and this is also why accusations of manipulating currency have implications and huge interest for South Africans.

Brown equally noted that though banks never admit they were wrong but pay large non-admission of guilt fines. He said similar banking scandals are becoming a norm globally.

“We have seen so many of them‚ with accusations of banks manipulating the gold price and LIBOR rates in Britain. There is a lot of dodgy stuff.”

The three South African banks: Absa‚ Standard Bank and Investec did not react to the news as their share prices barely moved after the announcement.



Brown said this may be partly as the investigation by the tribunal would take a long time. “I am expecting a Twitter storm. The banks are under huge pressure in South Africa.”

Most foreign banks had local financial assets and offices that could be attached if they were eventually fined making it not so easy to ignore local competition authorities.

The charges against the top three SA banks alongside other foreign banks come at the time the ruling African National Congress (ANC) is calling for the fundamental transformation of the financial sector in order to change “monopolistic behaviour”.

The party leader and president of the country, Jacob Zuma said while

addressing the parliament during the debate on the 2017 state of the nation address, speaking with the state-owned broadcasters (SABC) hours after a chaotic House of Assembly, that the stagnancy the SA economy finds itself is as a result of the monopolistic approach the country’s top four banks adopt.

Telecommunications and Postal Services Minister Siyabonga Cwele repeated this on Wednesday while pointing at a need to review the financial sector charter in relation to access to finance for small and informal businesses as well as financial inclusion, affordability and bank charges.

Zuma said the top four banks which include Absa, Standard Bank, FNB and Nedbank, are in the habit of treating the poor and average black people unfairly due to their lack of collateral. “The time has come: we should be able to deal with the economy at a fair level,” he said.

In like manner, the ANC had called for the opening of space for a variety of sector-specific banks or second-tier banks such as a construction bank, stokvels, co-operative banks and state banks to improve access and affordability to support inclusive growth.

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Meanwhile opposition party, the DA countered ANC’s radical transformation policy proposed by the ruling party, saying its a code word for radical corruption”.

The party said the ANC has long abandoned the idea of real broad-based empowerment if they ever believed in it at all. “Empowerment — ANC style — is empowerment for billionaires and millionaires and scraps for the rest” added the DA.