FTC slaps 59 million won fines on HSBC, Deutsche BankThe country’s antitrust agency slapped fines Tuesday on branches of two foreign financial institutions for unfair trading practices in the foreign exchange market.
The Fair Trade Commission imposed fines totaling 59 million won ($49.498) on the local branches of the Hongkong and Shanghai Banking Corporation (HSBC) and Deutsche Bank and warned against collusion in the local foreign exchange swap market.
HSBC was slapped with the larger fine of 46 million won, while Deutsche Bank was hit with 13 million won.
The agency imposed the fines based on what it said was unfair earnings from swap transactions.
According to the commission, salespeople at the two banks colluded to let each other win deals in a foreign exchange swap transaction made in 2011, which was worth $88 million. The employees communicated with each other via a messenger service and set prices prior to the biddings. In a total of four rounds of bidding, they supported each other alternatively to win.
Under the nation’s fair trade law, such collusion is considered an unfair limit to competition in the market.
“It is the first time the agency caught such practice in the trading of foreign exchange derivatives,” said Chun Choong-soo, director of the international cartel investigation bureau at the FTC. “We hope such collusion will be reduced in the market.”
The antitrust agency will keep monitoring the local foreign exchange market to root out unfair trade in financial derivatives, the official added.
“The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch, has cooperated fully with the FTC throughout this investigation,” HSBC said in an official statement Tuesday. “We have zero tolerance for behavior that does not live up to our values and will take action as appropriate.”
Deutsche Bank, which was embroiled in a stock manipulation scandal earlier this year, declined to comment. In January, the German bank’s securities brokerage in Seoul and one of its employees were convicted of manipulating share prices in November 2010 in the Seoul Central District Court. A 43-year-old banker was sentenced to a five-year jail term and his employer, Deutsche Securities Korea, fined 1.5 billion won.
“There are rumors that the FTC is currently inspecting 20 foreign financial institutions,” said a market insider who declined to be named. The FTC refused to comment on the current investigation.
BY SONG SU-HYUN [email@example.com]
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