South Africa’s finance minister said he’s worried a probe into foreign currency manipulation may expose risks in the banking system, as government officials prepare to meet the central bank to discuss the investigation.
“We are very concerned,” Nhlanhla Nene said in an interview at a meeting between business and government leaders in Johannesburg Thursday. “We will meet with the Reserve Bank tomorrow to understand what happened and if there’s any impact on South Africa’s financial systems.”
The country’s Competition Commission said May 19 it suspects 11 companies of using electronic messaging software to coordinate foreign exchange deals when quoting prices to customers. The central bank, which regulates South African lenders, said the antitrust agency was reacting to a complaint against “certain foreign exchange traders,” without giving further information.
JPMorgan Chase & Co., Citigroup Inc., Barclays Africa Group Ltd., Standard Bank Group Ltd. and Investec Ltd. were among the lenders named.
“It was something we were only notified of two days ago so we’ll have to see where it goes,” Stephen Koseff, chief executive officer of Investec, said on a conference call Thursday. “We haven’t been told what it’s about.”
The finance ministry may make a public statement about the foreign exchange investigation in time, Nene said. Hlengani Mathebula, a spokesman for the central bank, didn’t answer calls to his phone.
After a global currency-rigging probe, six of the world’s biggest banks are paying $5.8 billion in settlements with the U.S. Justice Department that were announced Wednesday. The investigation hadn’t reached South Africa until this week, when the Competition Commission said it wanted to send a “clear message” and had evidence traders dealing in the rand had been fixing prices in relation to bids, offers and bid-offer spreads.
The rand, which has dropped 12 percent against the dollar in the past year, was 0.4 percent firmer at 11.7881 as of 12:45 p.m. in Johannesburg.
Standard Chartered Plc, also named in the probe, Investec, Barclays Africa and Citigroup have said they will cooperate with the commission, while Standard Bank and BNP Paribas SA, also under investigation, said they couldn’t immediately comment. JPMorgan declined to comment.