Rates rort earns banks $100m fine

AUSTRALIANS should be “shocked, dismayed and disgusted” at attempts by ANZ and National Australia Bank to rig a key lending rate, a Federal Court judge has said.

Justice Jayne Jagot delivered the appraisal yesterday as she approved a combined $100 million penalty levied against the pair.

The enforceable undertakings the banks have agreed to, along with their admissions, were presented to Justice Jagot, who blasted the banks for their behaviour in attemp- ting to rig the bank bill swap rate.

The interest rate, also known as the BBSW, is a benchmark used to price billions of dollars worth of loans, bills, bonds and derivatives in the Australian financial system.

Justice Jagot said the banks had sought to “corrupt the system for mere short-term gain” and broken away from standards of “decency, honesty and fairness”.

Both admitted to “unconscionable conduct” for the attempts made between 2010 and 2012.

Each bank will have to pay $50 million under their settlements with the corporate regulator, the Australian Securities and Investments Commission.

Under the terms of the settlement, ANZ has admitted to 10 attempts to manipulate the rate, after being accused of more than 40 contraventions.

NAB admitted to 12 attempts after about 50 contraventions were alleged.

“The public should be shocked, dismayed and disgusted,” Justice Jagot said. She said they had both deliberately sought to manipulate the benchmark rate.

The commission had also alleged the banks succeeded in fixing the rate, but in a win for the lenders, neither has had to make such an admission nor been penalised as such.

With NAB and ANZ agreeing to settle, Westpac is the last bank fighting charges of rigging the bank bill swap rate.

Westpac’s case is continuing in the Federal Court before a different judge, Justice Jonathan Beach.

ASIC had accused all three lenders of manipulating the bank bill swap rate to profit at the expense of others in the market.