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'Public should be shocked': judge clears NAB, ANZ $100m rate-rigging settlement
The public should be "shocked, and indeed disgusted" by the behaviour of National Australia Bank and ANZ Bank, Federal Court Justice Jayne Jagot said as she approved settlements between the banks and corporate regulator.
ANZ on Friday admitted wrongdoing by some of its traders as part of a deal it struck with the Australian Securities and Investments Commission (ASIC), which had accused the bank of trying to rig one of Australia's key interest rates.
"The public should be shocked" by the banks' conduct, the judge said.Credit: Paul Rovere
ANZ will pay a total penalty of $50 million, after it said some of its traders attempted to engage in unconscionable conduct on 10 occasions between 2010 and 2012.
ANZ, which was facing allegations it had rigged the bank bill swap rate (BBSW) on 44 separate days, agreed to settle the high-profile case late last month but had not revealed details of the settlement until Friday.
NAB's settlement, which was announced by the bank two weeks ago and also involved a payment of $50 million, was also approved by Justice Jagot on Friday in Melbourne.
The combined $100 million in penalties should serve as a deterrent, Justice Jagot told the court.
"The public should be shocked, and indeed disgusted" by the conduct of the banks, aimed at corrupting a key benchmark in the pursuit of short-term gain, Justice Jagot said.
In a statement to investors, ANZ admitted it did not have adequate policies or systems in place to monitor the trading and communications of its traders in the BBSW market.
"We know our customers and the community expect better from us and we apologise for both the attempted unconscionable conduct and our inability to prevent or detect the behaviour," chief risk officer Nigel Williams said.
The bank's statement said that since 2015, it had changed the way it ran the markets business, including through more training of traders, and new policies and systems.
ANZ also said it had entered into a court-enforceable agreement with ASIC to review its contracts, controls, policies and training of BBSW trading.
ASIC alleged traders at ANZ, NAB and Westpac sought to manipulate the BBSW rate - used as a benchmark for the pricing of many commercial products - to benefit their institutions' trading positions.
The move by ANZ and NAB to settle with ASIC leaves Westpac as the only lender fighting the case, though so far the bank has shown little public inclination to settle.
Chief executive Brian Hartzer this week said despite the negative headlines from the trial, which has included expletive-laden transcripts of conversations between traders, there was an important matter of principle at stake.
"We'd rather not be in court over this, but they were firm in their views, and we're firm in our views, and when that happens the only option is to let the judge make the ruling," Mr Hartzer said on Monday.
ANZ's settlement includes a $10 million fine, a $20 million payment towards ASIC's costs, and a $20 million contribution to a financial consumer protection fund.
Banks had initially been reluctant to settle the case because admitting wrongdoing could leave the lenders exposed to class actions from customers.
However, NAB and ANZ minimised the potential of further suits by admitting only to attempting to engage in unconscionable conduct; class actions rely on the plaintiff being able to show actual losses.
BusinessDay and Bloomberg