Wed, Jan 31, 2018 - Page 10 News List

Australian lender taken to court in rate-rigging case

‘UNCONSCIONABLE CONDUCT’:Commonwealth Bank of Australia is accused of affecting the level at which the bank bill swap reference rate was set to maximize profits


Australia’s biggest bank, Commonwealth Bank of Australia (CBA), was yesterday taken to court by the corporate watchdog over allegations it rigged the benchmark interest rate, the latest of several of regulatory probes into the embattled institution.

The bank is already facing a civil case brought by Australia’s financial intelligence agency AUSTRAC for alleged “serious and systemic non-compliance” of anti-money laundering laws concerning thousands of transactions.

AUSTRAC last month accused the bank of further breaches, by failing to adequately monitor suspected terrorist financiers.

The new case, filed by the Australian Securities and Investments Commission, alleges that the bank engaged in “unconscionable conduct and market manipulation” when setting the bank bill swap reference rate (BBSW).

The commission said that on three separate occasions in 2012, CBA “traded with the intention of affecting the level at which BBSW was set so as to maximize its profits or minimize its losses to the detriment of those holding opposite positions to CBA’s.”

There was no immediate comment from CBA. Its shares closed down 0.13 percent at A$79.09 in Sydney.

The BBSW is a benchmark used to set the price of Australian financial products such as bonds and loans.

Australia’s three other major banks — Australia and New Zealand Banking Group (ANZ), Westpac Banking Corp and National Australia Bank — have also been probed by the commission over rate-rigging claims.

ANZ and National settled their cases before their trials began in October last year, with the banks paying A$50 million (US$40 million) each in penalties.

The commission action against CBA came a day after the firm appointed its retail banking chief Matt Comyn to replace Ian Narev as chief executive.

Narev was one of the casualties in the fallout following the AUSTRAC case and had flagged his retirement by the end of the 2018 financial year.

The case also prompted other Australian regulators to launch inquiries into the bank over its handling of the alleged breaches.

The string of scandals engulfing the finance industry in November prompted Canberra to call a wide-ranging inquiry to restore faith in the massively profitable sector.

Leading local financial institutions had been under increased scrutiny in recent years amid allegations of dodgy financial advice, and life insurance and mortgage fraud.

Scandals have also hit the sector globally, such as the rigging of the London Interbank Offered Rate interest rate and of foreign-exchange rates.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top