The corporate regulator has launched legal action against National Australia Bank for allegedly manipulating the bank bill swap rate (BBSW) 50 times. The BBSW is a key benchmark interest rate that determines the pricing of financial products across the economy.
NAB is the third of the big four banks to be sued by the Australian Securities and Investments Commission, which filed actions against ANZ Banking Group on March 4 and Westpac Banking Corp on April 5, the day before Prime Minister Malcolm Turnbull criticised bank culture in a speech at Westpac.
Both banks are defending the actions.
The case against NAB was filed in the Federal Court after the market closed on Tuesday. NAB has been contacted for its response.
ASIC’s case is based on unconscionable conduct and market manipulation.
ASIC alleges NAB “traded in a manner that was unconscionable and intended to create an artificial price” for bank bills on 50 occasions during between June 8, 2010 and December 24, 2012
“ASIC alleges that on these days NAB had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower,” ASIC said in a statement.
“ASIC alleges that NAB was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to NAB’s.”
ASIC’s claim comes as the culture in Australia’s banks has become a significant issue in the federal election campaign, with Labor and the Greens arguing a Royal Commission is necessary to investigate the sector.
The BBSW is the Australian debt market’s main benchmark rate, which means it is used as a reference for pricing hundreds of billions of dollars of bonds, derivative contracts and loans.
ASIC has asked the court to make declarations against NAB and is seeking pecuniary penalties and an order requiring NAB to implement a compliance program.