U.S. regulators to join UK in forex fines for banks

By Douwe Miedema and Kirstin Ridley

WASHINGTON/LONDON, Nov 6 (Reuters) - U.S. regulators plan tojoin their UK peers in a multi-billion-dollar settlement with agroup of the biggest global banks accused of manipulating theforeign exchange market, sources familiar with the matter said,adding the deal could come as early as next week.

The U.S. Commodity Futures Trading Commission, whichoversees futures and swaps trading, aims to announce itssettlement around the same time as London's Financial ConductAuthority, said one of the sources, who was not authorized tospeak publicly.

The U.S. Office of the Comptroller of the Currency and theFederal Reserve, which regulate banks, would also join, a secondsource familiar with the talks said, though the exact timing maynot align with the UK because of when markets open.

The CFTC, the OCC and the Fed declined to comment.

The UK deal is with six banks that could reach a combinedtotal of roughly 1.5 billion pounds ($2.38 billion). They areBritain's RBS, Barclays and HSBC,Switzerland's UBS, and Wall Street giants JPMorgan and Citi.

A group settlement could be appealing to the banks, afterBarclays in 2012 faced a public flogging when it was the firstbank to settle with regulators over a global investigation intothe rigging of Libor benchmark interest rates.

However, the settlement is not expected to resolve acriminal investigation by the U.S. Department of Justice. It isalso unclear whether it will include a probe by the New York'sDepartment of Financial Services, led by Benjamin Lawsky.

The U.S. DOJ "is much more interested in taking scalps andlooking aggressive," said a source familiar with theallegations.

Also, some of the banks could end up pleading guilty tocriminal charges to resolve the DOJ probe, which could touch offfurther consequences for regulators to address, includingrevoking licenses.

In the UK, prosecutors are also investigating criminalallegations, though the outcome is unclear.

COSTLY SETTLEMENT

The timing of the UK settlement, the first in a year-longglobal probe into the $5.3 trillion-a-day foreign exchangemarket, is still fluid but is expected to come before Nov. 26,when FCA head of enforcement Tracey McDermott speaks at a Londonconference.

The group of banks in the U.S. settlement was notnecessarily the same as the group in the UK deal, the secondsource said, though there would be overlap.

Bank of America on Thursday said it was in "advanceddiscussions" with U.S. banking regulators over foreign exchangeand that it would take a $400 million charge because oflitigation expenses in its third quarter.

Estimates vary widely on how much banks will be fined intotal for FX. Earlier this year, banking research firmAutonomous put the worldwide total at around $35 billion.

This would dwarf the $6 billion paid so far by 10 financialfirms to settle allegations of wrongdoing related to benchmarkinterest rates such as Libor.

(1 US dollar = 0.6320 British pound) (Reporting by Douwe Miedema and Kirstin Ridley, additionalreporting by Steve Slater and Jamie McGeever in London; Editingby Karey Van Hall and David Gregorio)