National Australia Bank has been ordered to pay $50 million, after an investigation by the financial regulator found its staff broke the law trying to rig a key interest rate guideline.
NAB announced a landmark settlement had been reached with the Australian Securities and Investments Commission (ASIC) on Friday, following allegations its employees had rigged the bank bill swap rate (BBSW).
The BBSW, as it is known in financial markets, is a key benchmark used to price billions of dollars of loans, bills, bonds and derivatives.
NAB has been ordered to pay $50 million, after an investigation by the financial regulator found its staff broke the law trying to rig a key interest rate guideline
The guideline determines the rate banks can charge to lend each other money over a short period of time, and is one of the most important interest rates in the economy.
NAB admitted that on 12 occasions in 2010 and 2011, employees trading in the BBSW attempted to engage ‘in unconscionable conduct’.
NAB has agreed to a $10 million penalty, ASIC’s costs of $20 million and make a donation of $20 million to a financial consumer protection fund nominated by the regulator.
NAB admitted that on 12 occasions in 2010 and 2011, employees trading in the BBSW attempted to engage ‘in unconscionable conduct’ (pictured: NAB CEO Andrew Thorburn)
‘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 Andrew Thorburn said.
Mr Thorburn said the bank ‘welcomed’ the changes being introduced to the way the BBSW is calculated.
ASIC began investigating major banks in 2012 over the integrity of past bank bill swap rate settings.
The NAB settlement comes just a few days after ANZ settled their dispute with the ASIC, reported to have also cost $50 million.
The settlement with NAB remains subject to the Federal Court’s approval.