CAPE TOWN (Reuters) - South Africa's Competition Commission has granted Barclays Africa (>> Barclays Africa Group Ltd) conditional immunity from prosecution in return for its continuing cooperation in the rand currency trading probe, the head of the Commission said on Tuesday.

The Commission said last week it had found more than a dozen local and foreign banks colluded to coordinate trading in the rand and the U.S dollar using an instant chat room called "ZAR Domination".

It recommended fines amounting to 10 percent of the banks' South African revenues in a scandal that has piled political pressure on the country's big four banks and raised questions about their dominance in Africa's most industrialised economy.

The local lenders have around a 90 percent market share of the South African banking market.

"We did, through the investigation, receive a leniency application from Barclays/ABSA which cooperated and gave us more information," The head of the Commission Tembinkosi Bonakele told a parliamentary committee on Tuesday.

"We have a conditional agreement with them on immunity but this is subject to confirmation depending on the extent of their cooperation."

Barclays Africa, whose branches a branded ABSA ans is a regional subsidiary of Barclays Plc (>> Barclays PLC), did not immediately respond to a request for comment.

On Monday the Commission said that the local arm of Citigroup (>> Citigroup Inc) had agreed to pay a reduced $5 million penalty in settlement for its role in the alleged currency trading cartel after it "undertook to cooperate".

"I would say that the settlement was low, but as a prosecutor you sometimes have to make these calls because we have a bigger case to run," Bonakele said on Tuesday, referring to Citi.

The scandal has rattled the share prices of the South African-listed banks, with the sector index <.JBANK> having dropped by nearly 4 percent over the last four sessions.

Anglo-South African investment bank and asset manager Investec (>> Investec plc) (>> Investec Ltd) has said again following a statement made earlier this week that it would seek further information from the regulator in order to continue to cooperate, according to an internal memo seen by Reuters.

"The Competition Commission's case against Investec Limited is confined to the alleged conduct of a single trader who is employed by the bank. This particular trader dealt with interbank clients," Investec said in the memo.

Revenue from Investec's foreign exchange division averaged below 1 percent of its South African bank's total revenue over the last 10 years, according to the memo. Investec's local banking unit reported 10.4 billion rand in total operating income in the year ended March, 2015.

GLOBAL SCANDAL

The Commission began its investigation in April 2015, joining an international probe into the manipulation of foreign exchange rates that has led to big banks paying more that $10 billion in settlements.

Former Citigroup foreign exchange dealer Christopher Cummins and Jason Katz, who worked at Barclays and later BNP Paribas SA, pleaded guilty in the United States to conspiring to fix currency prices last month.

Both, along with several others, are named in the South African regulator's report on its investigation that has been referred to the Competition Tribunal, which holds hearings on antitrust matters before giving a ruling.

Bonakele said the Commission was seeking a maximum penalty against other banks whose traders are alleged to have been involved in the scandal but the "door was not closed" for those seeking to apply for leniency in exchange for information that would help lead to a successful prosecution.

President Jacob Zuma said last week that the government would clamp down hard on financial market abuse.

Other banks and brokerages named in the case were Nomura (>> Nomura Holdings Inc), Standard Bank (>> Standard Bank Group Ltd), Investec (>> Investec Ltd), JP Morgan (>> JPMorgan Chase & Co.), BNP Paribas (>> BNP Paribas), Credit Suisse Group (>> Credit Suisse Group AG), Commerzbank AG (>> Commerzbank AG), Standard New York Securities Inc, Macquarie Bank (>> Macquarie Group Ltd), Bank of America Merrill Lynch (BAML) (>> Bank of America Corp), ANZ Banking Group Ltd (>> Australia and New Zealand Banking Group) and Standard Chartered Plc (>> Standard Chartered PLC)

Officials at Standard Bank, BAML, Commerzbank, BNP Paribas, Nomura, Credit Suisse, ANZ, Macquarie and Standard Chartered have so far declined to comment. The other banks have not responded to requests for comment.

(Additional reporting by Tiisetso Motsoeneng; Editing by James Macharia, Greg Mahlich)

By Wendell Roelf