A number of banks under investigation in Brazil for allegedly forming a cartel to manipulate foreign exchange rates are negotiating settlement deals with regulators that could involve multimillion U.S. dollar fines, O Estado de S. Paulo reported.
Banco BOCOM BBM SA, Banco BNP Paribas Brasil SA, Banco BTG Pactual SA, Banco Citibank SA and HSBC Bank Brasil are reportedly under antitrust regulator Cade's radar in two parallel investigations over alleged collusion that would have harmed the Brazilian market and the rigging of exchange rates that would have affected the local real currency.
Meanwhile, Cade is also investigating Banco ABN AMRO Real SA, Banco Itaú BBA SA, Banco Fibra SA, Banco Santander (Brasil) SA and Banco Société Générale Brasil SA for their involvement in the schemes, but to a lesser extent than the other banks, according to the report.
The watchdog is reportedly looking to reach deals with banks who agree to cooperate with the probes and pay discounted fines. The discount on the fines will be larger for the first banks who agree to cooperate.
In mid-June, Cade fined Morgan Stanley and Royal Bank of Canada a total of 42.9 million Brazilian reais for participating in an offshore foreign exchange market cartel after the two companies entered into deals with the regulator as part of the same investigation.
At the time, Cade said there was evidence that the two banks agreed to fix exchange rate spreads and coordinate the buying and selling of currencies, among other fraudulent activities.
Meanwhile, dozens of export companies have filed lawsuits against 10 banks that were allegedly involved in the rate-rigging cartel, O Estado de S. Paulo reported separately. The exporters claim the banks manipulated dollar prices in their dealings with the companies between 2007 and 2013, resulting in estimated losses of more than 50 billion reais.
However, the export firms are unlikely to receive any compensation until Cade concludes its investigation into the banks, according to the publication.
In late 2016, Cade penalized five financial institutions, including Barclays PLC, Deutsche Bank SA – Banco Alemão, JPMorgan Chase & Co., HSBC Holdings PLC and Citicorp, as part of the exchange rate manipulation probe. Those banks agreed to pay 183.5 million reais in fines.
As of July 5, US$1 was equivalent to 3.92 Brazilian reais.