* Govt ready to act against price fixing - Zuma
* ANC calls for toughest penalty available
* Commission recommends fine of 10 pct of banks' local
(Adds treasury statement)
By Joe Brock and Tiisetso Motsoeneng
JOHANNESBURG, Feb 16 South Africa will come down
hard on financial market abuse, President Jacob Zuma said on
Thursday, following accusations that more than a dozen local and
foreign banks had rigged rand currency dealing.
The Competition Commission said on Wednesday it had found
the banks, including U.S., European, Japanese and Australian
lenders, had colluded to coordinate their trading activities
when dealing in the South African and U.S. currencies.
With the banks already a target for public anger, Zuma
piled on the political pressure. "Government is ready to act
against market abuse, price fixing and collusion in the private
sector in order to protect our country's economy," he told
South Africa's economy, which has hardly grown since
emerging from a recession in 2009, remains largely in the hands
white minorities more than two decades after the fall of
apartheid. Of the four biggest lenders, which control more than
90 percent of the country's banking market, all but Standard
Bank have white chief executives.
The ruling ANC party on Thursday called for the toughest
possible sanctions against the banks.
"The African National Congress takes an extremely dim view
of the activities of the listed banks. These acts of corruption
have crudely exposed the ethical crisis in the South African
banking sector," the party said in a statement.
"It is further an indication of how the markets are and can
be manipulated by dominant oligopolies to cripple its
functioning to suit their nefarious agendas."
The National Treasury said it viewed the report seriously
and that if found guilty the banks should be sanctioned
"We view this matter in a very serious light and welcome any
steps taken against wrong-doing by any financial institutions,"
the Treasury said in a statement.
South Africa's banking index fell as much as 1
percent after the Commission, which has been conducting an
investigation since April 2015, recommended heavy fines be
imposed on the lenders. By the end of session, the index had
recouped all the losses.
Financial regulators are clamping down worldwide, with
dozens of traders fired and big banks fined around $10 billion
in total in separate cases for rigging the level of the Libor
interest rates and other market benchmarks.
The opposition Democratic Alliance accused the ANC of
politicising the issue, saying ministers want "to do battle with
the banks, regardless of the economic fallout".
Michael Cardo, who speaks on economic development for the
right-leaning party, said Zuma's State of the Nation Address
last week had made clear "he intends using the competition
authorities as a tool of his populist and destructive agenda of
'radical economic transformation'".
Last year the ANC suffered its worst ever local election
performance as the left-wing Economic Freedom Fighters (EFF) won
over many poor black South Africans with promises of radical
redistribution of wealth.
The EFF and sections of the ANC often criticise banks for
keeping the wealth of the country in the hands of the white
The investigation found that from at least 2007, banks had
an agreement to collude on prices for bids, offers and bid-offer
spreads for spot trades involving the rand - whose international
market code is ZAR - and the U.S. dollar, the Commission said.
Its inquiry centred on an instant messaging chat room called
"ZAR Domination", which the Commission said was used to
coordinate trading activities when giving quotes to customers
who buy or sell currencies.
Fines should amount to 10 percent of the banks' South
African annual revenues, the Competition Commission's spokesman
Sipho Ngwema said. Under South African rules, companies can be
fined a maximum of 10 percent of their turnover for
The Commission said it had referred the case for prosecution
to the Competition Tribunal. This holds hearings on anti-trust
matters before making a finding which parties affected can take
to South Africa's Competition Appeal Court.
The Banking Association of South Africa said it would
support any judgement imposed on a bank that is contravention of
South African law. "If the Tribunal finds any bank, or all
relevant banks, wanting, the law must take its course and each
bank must abide by the outcome," it said in a statement.
The banks and brokerages named in the case were Citigroup
, Nomura, Standard Bank, Investec
, JP Morgan, BNP Paribas, Credit
Suisse Group, Commerzbank AG, Standard New
York Securities Inc, Macquarie Bank, Bank of America
Merrill Lynch (BAML), ANZ Banking Group Ltd,
Standard Chartered Plc and Barclays Africa (Absa)
, part of the Barclays Plc.
Investec and Barclays both said they would cooperate with
the probe while Standard Bank, BAML, Commerzbank, BNP Paribas
Nomura, Credit Suisse, ANZ and Standard Chartered declined
comment. The others have yet to comment.
(Addition reporting by Ed Cropley, Mfuneko Toyana, Wendell
Roelf and Ed Stoddard; Editing by David Goodman and David Stamp)