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Screenshot of a breaking news alert e-mail from Q2 2017
The wave of settlements of leading financial institutions with global regulators over Forex market manipulation seems to be behind us, but the consequences for the banks themselves are still harshly felt. One of the banks to pay the heaviest bills over these settlements is Citigroup Inc (NYSE:C).
With a bill of approximately $2.3 billion paid by Citi to resolve matters with regulators in Europe and the US over FX rigging, the bank is now facing the question of means and ends. It turns out that Citi’s Forex fines are thousand times higher than the gains it made from manipulating the Forex markets.
According to estimates by Jamie Forese, head of the Citigroup Inc. unit for trading and investment banking, quoted by Bloomberg, revenue from the illicit trades totaled about $1 million. This means, that the settlements with regulators cost Citi more than 2,000 times those revenues.
Citi’s Forex fines include:
- $925 million fine from the US Department of Justice;
- $342 million civil monetary penalty from the Fed;
- $310 million penalty from the CFTC;
- $350 million penalty from the U.S. Office of the Comptroller of the Currency (OCC);
- $358 million penalty from the UK Financial Conduct Authority (FCA).