Australia’s biggest bank admits wrongdoing in rate-rigging case
SYDNEY: Australia’s biggest bank yesterday admitted to ‘unconscionable’ behaviour and agreed to pay A$25 million (US$18.5 million) after a raterigging case was brought against it by the corporate watchdog.
The Commonwealth Bank of Australia (CBA) has been engulfed in a string of scandals, including claims it broke anti-money laundering and counter-terrorism financing laws.
The banking giant was taken to court by the Australian Securities and Investments Commission (ASIC) in January after a two-year probe – one of several regulatory investigations launched into the country’s scandal-plagued finance industry.
“In the course of trading on the BBSW market in Australia on five occasions between February and June 2012, CBA attempted to engage in unconscionable conduct in breach of the ASIC Act,” the bank said in a statement.
The BBSW (bank bill swap reference rate) is a benchmark used to set the price of Australian financial products such as bonds and loans.
ASIC claimed that CBA “traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses to the detriment of those holding opposite positions to CBA’s”.
As part of a settlement, the bank “will also acknowledge it did not have adequate policies and systems in place to monitor the trading and communications of its staff in order to prevent that conduct from occurring”, it added.
The lender said it had agreed with the regulator to pay Aus$25 million in penalties, ASIC’s court fees and a contribution to a consumer protection fund.
It will also appoint an ‘independent expert’ to review how it conducts its business relative to the BBSW.
The latest admission caps a difficult few months for the Commonwealth Bank.
Last week the nation’s largest company admitted it had lost the financial records of close to 20 million customers in a major security error Prime Minister Malcolm Turnbull called “an extraordinary blunder”.
The revelation came just days after a scathing report by the country’s financial services regulator slammed CBA for a complacent culture and ineffective board.
Alongside Australia’s three other major lenders – National Australia Bank, Westpac and ANZ – it is also under scrutiny in a royal commission looking into misconduct in the finance industry.