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Westpac under pressure to settle ASIC court case after NAB, ANZ fold

Westpac could end up going it alone in defending allegations it rigged a key interest rate. Photo: Wayne Taylor Westpac could end up going it alone in defending allegations it rigged a key interest rate. Photo: Wayne Taylor

Westpac is under increasing pressure to settle a landmark court case brought by the corporate watchdog over the alleged rigging of one of Australia's key interest rates after its fellow accused, ANZ and National Australia Bank, folded last week. 

It is understood informal talks between the Australian Securities and Investments Commission (ASIC) and Westpac continued over the weekend.

Some market watchers are tipping Westpac could settle the case as early as Monday rather than risk the negative publicity that would be caused by going it alone.

However, Westpac was understood to be still preparing to fight the case on Sunday as it remains concerned that any settlement would include an admission of unconscionable conduct could leave it open to class actions. 

How the bank bill swap rate is calculated. Source: Australian Financial Markets Association (AFMA)

Westpac has long argued that it has a stronger case than ANZ and NAB because its treasury desk was separate from its trading desk at the time of the alleged breaches in 2010, 2011 and 2012.

ASIC had alleged the three banks each separately rigged the bank bill swap rate, a key benchmark rate that is used when setting the cost of business loans, for financial gain.

The trial resumes on Monday after being delayed last week because of the settlement negotiations between ASIC and NAB and ANZ.

National Australia Bank confirmed to the Australian Securities Exchange late on Friday it had settled with ASIC for $50 million.

As part of the settlement NAB has admitted to attempting to engage in unconscionable conduct on 12 occasions.

On Monday last week ANZ Bank confirmed it had reached an in principle agreement with ASIC. ANZ Bank's settlement is reportedly worth $50 million.

NAB has agreed to pay ASIC's costs of $20 million as part of its settlement. ANZ's deal is also believed to cover ASIC's costs.

The bank bill swap rate is a key rate at which banks lend to each other over a short period. It is one of the most important interest rates in the economy, providing a benchmark for the setting of a range of business loan interest rates.

Westpac has been accused of 16 counts of unconscionable conduct by ASIC. NAB faced 50 counts and ANZ 43 counts.

No individual bank employees were listed as defendants in the matter despite chat room transcripts showing several traders were implicated in the attempts to rig the rate.

However several traders, including seven from the ANZ Bank, have reportedly been sacked following an internal investigation at the bank into their involvement in rigging the rate.

The settlements will need to be signed off on by the Federal Court. 

This article was first published by http://www.smh.com.au
Author: Sarah Danckert

Last modified onMonday, 30 October 2017 23:18

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