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Australia's ANZ in last-minute settlement with regulator over rate rigging

Australia's ANZ in last-minute settlement with regulator over rate rigging
October 23, 2017
SYDNEY (Reuters) - Australia and New Zealand Banking Group Ltd has reached a last-minute agreement to settle a case brought by the country’s securities regulator accusing it of manipulating the bank bill swap rate.

Australia’s third-largest lender, which had previously said it would defend itself against the allegations, did not give a reason for its decision to settle or disclose financial terms. It said it would make a more detailed statement in two days time after more progress had been made on the agreement.

The deal could open ANZ to possible class action lawsuits from shareholders and also throws the spotlight on Westpac Banking Corporation and National Australia Bank which are facing similar allegations that they rigged a benchmark rate used to price financial products.

“Any settlement was likely premised on them admitting that they’ve done the wrong thing, which does open the way up for class actions,” said CLSA banking analyst Brian Johnson, although he added that the settlement sum with ASIC was likely to be immaterial in size.

ANZ said the financial impact would be reflected in the bank’s annual earnings due later this week.

The court hearings had been due to start on Monday but have now been adjourned until Wednesday at the request of the Australian Securities and Investments Commission (ASIC).

Westpac said it had no immediate comment on Monday. A representative for NAB was not immediately available for comment. They have previously said they would defend themselves in court.

ASIC’s allegations that the three lenders were involved in rigging the bank bill swap reference rate (BBSW) is only one of several scandals engulfing Australia’s banking sector in which lenders have also been accused of widespread abuses at their financial advice and insurance units.

Commonwealth Bank of Australia, the nation’s No. 1 lender, is not part of ASIC’s lawsuit.

But it has been taken to court by anti-money-laundering agency AUSTRAC which has accused it of more 50,000 breaches of anti-money laundering rules. ASIC has also launched its own investigation into the matter.

CBA has not disputed that it processed tens of thousands of illicit transfers but argues the breaches were largely caused by a software glitch and contests its level of responsibility.

Australia’s four major lenders control 80 percent of the country’s lending market and have posted record profits for years.

The BBSW is the primary interest rate benchmark used in Australian financial markets to price home loans, credit cards and other financial products. The method used to calculate the BBSW was changed in 2013. ANZ shares were 0.1 percent higher in afternoon trade, lagging the broader market which was up 0.7 percent.