Westpac faces court in rate-rigging probe

Sydney / AFP

Westpac Bank has vowed to “vigorously defend” itself against allegations it manipulated the interbank lending rate after Australia’s corporate regulator launched legal action against the financial giant, the second case in a lengthy investigation.
The Australian Securities and Investments Commission (ASIC) said it began legal action against Westpac in the federal court for manipulating a key market interest rate, which is used as a benchmark in domestic financial markets, from April 6, 2010 to June 6, 2012.
“ASIC contends that, on 16 occasions Westpac traded Prime Bank Bills in the Bank Bill Market with the intention and likely effect of influencing the setting of the bank bill swap reference rate (BBSW) to its advantage and to the disadvantage of parties to certain products who had an opposite exposure to the BBSW,” court documents said.
The documents quoted Westpac managing director for group treasury, Colin Roden, in a telephone conversation with another trader in 2010, as saying, “I knew it was completely wrong. We’ve got so much money on it, we just had to do it, right.”
Westpac’s group chief financial officer Peter King said the bank “will be vigorously defending ASIC’s allegations in court”.
“We reject the allegations made by ASIC and do not believe Westpac, or any employee, has acted unlawfully in relation to the instances detailed by ASIC,” he added in a statement on late Tuesday.
The global financial sector has been hit by recent scandals such as the rigging of the Libor (the London Interbank Offered Rate) interest rate and foreign exchange rates. Major banks have been slapped with billions of dollars in fines by US and British regulators and others are facing court.
The legal proceedings against Westpac follow similar court action against ANZ Bank in an ongoing three-year probe by ASIC, adding to the woes of a banking sector already under scrutiny over rising bad debts in the resources sector and a softening housing market.
Global banks RBS, UBS and BNP Paribas were fined between Aus$1 million (US$750,000) and Aus$1.6 million by ASIC for potential misconduct involving the bank bill swap rate in 2013 and 2014.
Shares in Westpac closed 1.55 percent lower at Aus$28.68 in Sydney.