National Australia Bank (NAB) found itself in the firing line today, after Australia's securities watchdog announced it would be pursuing civil penalties for alleged benchmark rigging.
The Australian Securities and Investments Commission (ASIC) has launched legal proceedings in the Federal Court in Melbourne, claiming that NAB was involved in manipulating the bank bill swap reference rate (BBSW) between 8 June 2010 and 24 December 2012.
In a brief statement, ASIC alleged that NAB behaved in a way that was "unconscionable" by attempting to move BBSW, which is the key interest benchmark rate used by the Australian financial markets, to artificially either maximise its profits or minimise its losses.
ASIC has approached the court to ask for declarations the NAB broke the laws associated with setting BBSW, for a financial penalty for the bank and for the bank to be forced to implement a compliance programme.
Responding to the ASIC statement, NAB's risk chief David Gall said:
NAB has fully co-operated with ASIC’s review and takes these allegations seriously. We do not agree with ASIC’s claims which means they will now be settled by a court process.
As part of ASIC’s investigation NAB has provided emails, instant chat messages and telephone conversations involving our employees. NAB retains this information as part of our business processes.
We remain committed to serving our customers and ensuring our people demonstrate the values and behaviours the community expects of us.
ASIC's filing against NAB represents the third set of proceedings it has brought against a major bank on allegations of rigging BBSW since the start of the year. In March, ASIC approached the court about the conduct of the Australia and New Zealand Banking Group and did the same again in April in relation to Westpac Banking Corporation.
In addition, in 2015, UBS, BNP Paribas and the Royal Bank of Scotland all accepted enforceable undertakings, which are entered into as an alternative to civil or administrative action when the ASIC alleges that the securities legislation has been breached. Between them, the three banks have paid AU$3.6m (£2.5m) towards the funding of financial literacy projects.
The method used for calculating BBSW, which is administered by the Australian Financial Markets Association, was changed in September 2013.