Banks raise objections in South Africa's FX rigging case- sources

Tiisetso Motsoeneng

* Banks say watchdog charges lack detail- sources

* Watchdog's jurisdiction over case challenged - sources

JOHANNESBURG, April 6 (Reuters) - Some of the banks South

African regulators have alleged rigged the rand currency say the

case against them lacks specific detail about anti-competitive

conduct and its impact, three sources with direct knowledge of

the matter said.

The banks have also questioned whether the country's

Competition Commission can penalise banks which do not have

subsidiaries or branches in South Africa, the sources said.

The Competition Commission is seeking to impose fines on

more than a dozen local and foreign banks that it alleges

colluded to coordinate trading in the rand and the U.S. dollar.

The Commission launched the investigation in April 2015,

joining a global clampdown that has led to big banks being fined

around $10 billion in total for rigging interest rate and forex


It referred the case to the Competition Tribunal, which

holds hearings on anti-trust matters before making a ruling. The

Commission has recommended that the Tribunal impose fines

amounting to 10 percent of the banks' South African revenues,

the maximum allowed.

At a closed preliminary Tribunal hearing in March, some of

the banks raised objections about the lack of specific detail in

the case to allow their lawyers to present a defence, one of the

sources said.

The Tribunal will meet again in July to consider the banks'

objections if the Commission has done enough to fine-tune its

case, the sources said.

The Competition Commission did not immediately respond to a

Reuters' request to comment.

Under South African regulations, the Commission is required

to investigate anti-competitive cases within South Africa, or

those that have an impact in the country.

"If there was an anti-competitive conduct, as the Commission

alleges, the question then is: did it have an effect in South

Africa? That's one jurisdictional issue the banks have raised,"

another source said.

Another issue raised was how banks with no subsidiaries or

branches in South Africa would be affected.

"Some of the banks want jurisdictional issues to be cleared

up because some of the them named have no branches in South

Africa," one source said. "How do you calculate a fine for banks

with no branches in South Africa?"

Australia's ANZ Banking Group has no branches in

South Africa. Nomura only launched a branch in South

Africa in April last year, almost a year into the Commission's


Among the banks, Barclays Africa Group, a regional

unit of Barclays Plc, has been granted conditional

immunity from prosecution in return for its cooperation in the


In February, the local arm of Citigroup was fined $5

million for its role in the affair. The Commission said it had

set the fine for Citi Bank NA South Africa at less than 10

percent of its annual turnover after the bank "undertook to

cooperate with the Commission."

Other banks named in the investigation were Standard Bank

, Investec, JP Morgan, BNP Paribas

, Credit Suisse Group, Commerzbank AG

, Macquarie Bank, Bank of America Merrill

Lynch (BAML), HSBC Plc and Standard Chartered


Standard Bank, South Africa's second biggest bank by market

value, said its own internal investigation had found no evidence

of any wrongdoing.

"Nonetheless, Standard Bank is treating these allegations

very seriously and will engage fully with the Competition

Commission and the Competition Tribunal to better understand the

basis for the complaints," spokesman Erik Larsen said.

StanChart would continue to co-operate with the Tribunal

process, spokeswoman Geraldine Matchaba said. JP Morgan,

Commerzbank, Bank of America and Nomura declined to comment.

Credit Suisse, BNP Paribas, HSBC, ANZ and Macquarie did not

respond to email requests for comment.

(Editing by Jane Merriman)