July 18 (Bloomberg) -- Royal Bank of Scotland Group Plc Chief Executive Officer Ross McEwan said the foreign-exchange market scandal could be more expensive to the banking industry than Libor or improperly sold loan insurance.
“Unfortunately it has the hallmarks,” he said in a radio interview with LBC today. “I have the feeling that it is a sort of a Libor case again.”
U.S. and U.K. authorities are investigating potential manipulation in the $5.3 trillion-a-day global currency market by banks around the world. It comes amid penalties for misconduct ranging from helping clients to evade taxes to money laundering. At least nine firms have been fined more than $6 billion for manipulating benchmark interest rates such as the London interbank offered rate.
Britain’s biggest government-owned bank, bailed out by taxpayers amid the global banking crisis, is checking “millions and millions of e-mails, chat-rooms, conversations” to see “what actually went wrong, if anything in this area,” in relation to foreign-exchange markets, McEwan said.
RBS was fined $612 million by U.S. and U.K. authorities in 2013 for manipulating Libor, while it has set aside 3.1 billion pounds ($5.3 billion) to cover the cost of compensating clients who were sold insurance on loans they didn’t require.
The U.K. banking industry has paid out 15.1 billion pounds to customers who were unhappy with the way they were sold payment protection insurance, according to the Financial Conduct Authority.
“The difference this time is that we haven’t sat back and denied it,” said McEwan who succeeded Stephen Hester as CEO in October. “We’ve gone into it and doing the investigation hand-in-hand with the authorities. And again, I’d like to see it cleaned up as quickly as we can.”
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