Aussie banks admit to ringgit cartel

MACQUARIE Bank Ltd and Australia & New Zealand Banking Group Ltd (ANZ) agreed to pay a combined A$15 million (RM50 million) in penalties after admitting to attempted cartel conduct relating to the setting of a benchmark Malaysian rate in 2011.

The Australian Competition and Consumer Commission (ACCC) said in a statement yesterday that Melbourne-based ANZ had admitted to 10 instances of alleged cartel conduct and Sydney-based Macquarie to eight. They offered to pay A$9 million and A$6 million in penalties, respectively, said the ACCC.

The case involved Singaporebased traders for the two banks and others communicating via private online chat rooms about daily submissions on the ringgit fixing rate to be made to the Association of Banks in Singapore, said the regulator. The settlement stems from a wider probe by the Monetary Authority of Singapore (MAS), which censured 20 banks — including ANZ and Macquarie — in 2013 for trying to rig benchmark interest rates.

“These proceedings are a reminder that Australian cartel laws apply to financial markets, and capture cartel conduct by firms that carry on business in Australia, regardless of where that conduct occurred,” said ACCC chairman Rod Sims.

Probes into the rigging of foreignexchange markets and interest-rate benchmarks have led to lenders across the globe paying billions of dollars in fines and an overhaul of how such rates are set.

The Australian Securities & Investments Commission is also now taking civil legal action against three of the big four banks over alleged manipulation of the Australian swap rate — the local equivalent of Libor. ANZ, National Australia Bank Ltd and Westpac Banking Corp are contesting the cases.

For trying to manipulate the Singapore interbank offered rate, swap offered rates and currency benchmarks, the MAS ordered the banks it censured three years ago to set aside as much as S$12 billion (RM37.66 billion), pending steps to improve internal controls. While the central bank said at the time it had it found no “conclusive” evidence that rates were successfully manipulated, the conduct of traders “reflected a lack of professional ethics”.

The MAS returned the money within 18 months, saying that the banks had taken steps to prevent a recurrence of attempts to rig rates. Of the 133 traders involved, about three-quarters had resigned or been asked to leave their firms, said the MAS in 2013.

ANZ’s Australian penalty stemmed from three Singaporebased employees’ unsuccessful attempts in 2011 to influence benchmark rates used to settle non-deliverable forward contracts for the ringgit, according to a statement from the lender. The three are no longer employed by ANZ, it said.

“We accept responsibility and apologise for the actions of our former employees,” said ANZ chief risk officer Nigel Williams in the statement. “We have made significant improvements to our compliance, training and monitoring systems to ensure this does not happen again.”

Macquarie’s settlement was linked to the actions of one former employee in Singapore five years ago, said the firm in a separate statement. No senior management or any other staff members were aware of the conduct of the junior employee, who was fired in 2012, said the bank.

Macquarie said it hadn’t “engaged in any conduct affecting the benchmark” or “obtained any benefit from the attempted behaviour”. The bank has boosted “ecommunication surveillance globally, improved trade monitoring and intensified training for its front-office staff”.

Australia’s Federal Court will decide whether the agreed penalties are appropriate, said the ACCC. Bloomberg

S’PORE-BASED TRADERS: Macquarie Bank and ANZ to pay A$6m and A$9m in penalties, respectively