SYDNEY: National Australia Bank (NAB.AX), the country’s No.3 lender by market value, on Friday said it had reached an agreement worth A$50 million ($38 million) with the corporate watchdog to settle a case over alleged manipulation of a key interest rate.
The Australian Securities & Investment Commission (ASIC) had filed a lawsuit last year, alleging three of Australia’s top lenders had rigged the bank bill swap rate (BBSW) for profit between 2010 and 2012. The BBSW is the primary interest rate benchmark used in Australian markets to price home loans, credit cards and other financial products. As part of the settlement, NAB has agreed to a A$10 million penalty, A$20 million in costs to the ASIC and a A$20 million donation to a financial consumer protection fund. The impact of the settlement, which is subject to court approval, will be reflected in NAB’s 2017 financial year results, it said in a statement. “We accept that we did not meet the high standards of professional conduct that ASIC, the community and NAB expects of itself, in that market during that period,” NAB Chief Executive Officer Andrew Thorburn said in a statement.
The settlement involves NAB admitting that on 12 occasions in 2010 and 2011, its employees attempted to engage in “unconscionable conduct” in breach of the ASIC Act while trading in the BBSW market. NAB will also acknowledge breaches of its license obligations and agree to a so called ‘Enforceable Undertaking’ with ASIC, the lender added. NAB and ASIC will make an application to the Federal Court for approval of the settlement, which may take a number of weeks to finalize. Rival Australia & New Zealand Banking Group Ltd (ANZ.AX), which faced similar allegations, reached a settlement earlier this week, leaving Westpac Banking Corp (WBC.AX) to slug it out with ASIC.
