Thursday 18 August 2016 1:17 pm

Lloyds Banking Group, HSBC and Royal Bank of Scotland in firing line in Australian rate rigging case brought in the US

Lloyds Banking Group, HSBC and Royal Bank of Scotland are all in legal hot water after a case was filed in the US against a slew of banks on allegations they rigged a key Australian benchmark rate. 

The US lawsuit claims the lenders manipulated the bank bill swap rate (BBSW), a benchmark used mainly in Australian markets to price various financial products and is not dissimilar to rates like Libor, to better benefit their trading positions.

According to Bloomberg, the other banks listed in the case, brought by Sonterra Capital Master Fund, a variety of FrontPoint Financial funds and derivatives trader Richard Dennis, are; JPMorgan Chase, Citigroup, Morgan Stanley, Australia & New Zealand (ANZ) Banking Group, National Australia Bank, Westpac Banking, Commonwealth Bank of Australia, BNP Paribas, UBS, Deutsche Bank, Macquarie Group, Royal Bank of Canada and Credit Suisse.

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The case has also been brought against brokers ICAP and Tullett Prebon.

Lloyds described the case as "without merit", adding that it "will contest it vigorously" but declined to comment further on the issue as the matter related to ongoing legal proceedings. 

ANZ also said it would be "vigorously" defending itself against the US claim. Meanwhile, Westpac noted, while it had not formally been served with any proceedings, it denied the allegations and planned on defending itself against any claim that should materialise. 

National Australia Bank noted it "does not agree" with civil actions which previously have been brought by the Australian Securities and Investments Commission against it in relation to allegations of manipulating the bank bill swap reference rate and which have been referenced to in the more recent filing. 

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Royal Bank of Scotland, JPMorgan, Morgan Stanley, UBS, Deutsche Bank, Citigroup, BNP Paribas and ICAP have declined to comment.

HSBC, Macquarie Group, RBC, Credit Suisse and Tullett Prebon have all been approached for comment. 

Benchmark rate rigging actions have plagued lenders for sometime now. For example, in the UK, the Financial Conduct Authority has fined banks over £750m for Libor and Euribor failings, and £1.4bn for foreign exchange failings.