This article is more than 1 year old

This article is more than 1 year old

Five banks including Barclays and Royal Bank of Scotland have been fined more than €1bn (£875m) by the European Union for rigging the multitrillion-dollar foreign exchange market.

The European commission said the banks, which also include Citigroup, JP Morgan and MUFG (Mitsubishi UFJ Financial Group), formed two cartels to manipulate the spot foreign exchange market for 11 currencies, including the US dollar, the euro and the pound.

Facebook Twitter Pinterest RBS said it had made changes to its controls. Photograph: Philip Toscano/PA

The commission’s penalty adds to the £1.3bn in fines imposed by the UK Financial Conduct Authority in 2014 over the same case. While the FCA’s penalty focused on the lender’s breach of regulations, the EU’s fine deals with how their behaviour dampened competition.

“These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets,” the European competition commissioner, Margrethe Vestager, said in a statement.

The banking industry has been hit with billions in fines worldwide over the last decade for rigging benchmarks used in many day-to-day financial transactions, and are now at risk of private lawsuits.

Law firm Scott + Scott said it is preparing to launch a case on behalf of European clients after securing a $2.3 bn (£1.8bn) settlement in a US class action suit related to foreign exchange market rigging. That class action involved 15 banks, including HSBC, Barclays, RBS, UBS, BNP Paribas and Deutsche Bank.

Belinda Hollway, a partner at Scott + Scott Europe, said: “We’ve been waiting for this step before initiating a recovery action. Our firm will be working to recoup losses suffered by non-US pension funds, asset managers, insurance companies and multinational corporations, among others, as a result of the banks’ wrongdoing.”

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Vestager said most of the traders involved in the manipulation knew each other on a personal basis and set up chatrooms with names such as “Essex Express ’n the Jimmy” because all of them except “James” lived in Essex and met on their train commute to London.

One cartel ran between December 2007 to January 2013, while the other operated from December 2009 to July 2012, it added.

A group dubbed the “Three-Way Banana Split”, made up of traders at UBS, Barclays, RBS, Citigroup and JP Morgan, was handed a fine totalling €811.2m, with Citigroup taking the biggest hit at €310.8m.

The Essex Express cartel, involving UBS, Barclays, RBS and MUFG, was handed a €257.7m fine, with the penalty against Barclays the largest for this cartel at €94.2m.

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Swiss bank UBS dodged a fine from the commission, having alerted the two cartels to the European commission.

JP Morgan and RBS said they were pleased to have settled the cases and that they had since made changes to their controls. JP Morgan said it related to the conduct of one former employee and RBS that it served as a reminder of how it had lost its way in the past.

MUFG said it had also taken measures to prevent a reoccurrence. Barclays and Citigroup declined to comment.