Australia banks’ re­ac­tions to probe ‘ap­palling’: watch­dog

The China Post - - WORLD BUSINESS -

Australia’s cor­po­rate watch­dog has de­scribed the be­hav­ior of the coun­try’s big­gest banks to­ward an in­ves­ti­ga­tion into pos­si­ble rig­ging of the bench­mark in­ter­est rate as “ab­so­lutely ap­palling” and de­manded more co­op­er­a­tion.

The Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion (ASIC) is ex­am­in­ing trad­ing prac­tices from 2007 to 2013 in in­ter­bank lend­ing, known as the bank bill swap rate mar­ket.

Its U.S. and Bri­tish coun­ter­parts in May fined six ma­jor global banks a to­tal of nearly US$6 bil­lion for rig­ging the for­eign ex­change mar­ket and Li­bor, the Lon­don in­ter­bank of­fered rate.

ASIC chair­man Greg Med­craft said the fi­nan­cial in­sti­tu­tions were de­lay­ing their re­sponses to re­quests for in­for­ma­tion and were also re­luc­tant to hand over chat room tran­scripts. Traders’ dis­cus­sions in chat rooms were key to the U.S. and Bri­tish in­ves­ti­ga­tions.

“The be­hav­ior in many in­sti­tu­tions in this has, frankly, been ab­so­lutely ap­palling,” Med­craft told the Se­nate Eco­nomics Leg­is­la­tion Com­mit­tee late Wed­nes­day.

“There have been sig­nif­i­cant de­lays caused by a le­gal­is­tic ap­proach to our re­quest for in­for­ma­tion. I will place that on the public record. It is de­lay­ing our in­ves­ti­ga­tions.”

He de­clined to name the in­sti­tu­tions.

One of Australia’s big­gest banks ANZ in Novem­ber suspended seven traders pending the out­come of the ASIC in­ves­ti­ga­tion, which could re­sult in civil and crim­i­nal penal­ties.

ANZ said in a state­ment that as the ASIC in­ves­ti­ga­tion was on­go­ing, “we have noth­ing fur­ther to add at this stage.”

ASIC in 2013 and 2014 ac­cepted en­force­able un­der­tak­ings — which are ad­min­is­tra­tive sanc­tions — from global banks RBS, UBS and BNP Paribas. They were fined be­tween AU$1 mil­lion (US$770 mil­lion) and AU$1.6 mil­lion for po­ten­tial mis­con­duct in­volv­ing the bank bill swap rate.

Med­craft said ASIC was plac­ing “enor­mous em­pha­sis” on the in­quiry, and con­firmed his or­ga­ni­za­tion had com­mit­ted 20 per­cent of its in­ves­tiga­tive re­sources into look­ing into the is­sue.

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