[SYDNEY] Australia's securities regulator on Tuesday said it had laid charges against National Australia Bank (NAB) for allegedly manipulating benchmark interest rates used to price financial products, an allegation the bank said it disputes.
The court action is the third launched by the Australian Securities and Investments Commission (ASIC) against a major Australian bank this year over claims they fixed the bank bill swap reference rate (BBSW) to their financial advantage. "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," the regulator said in a statement.
The watchdog is pursuing two other actions, against Australia and New Zealand Banking Group and Westpac Banking Corp. NAB is Australia's biggest lender.
NAB chief risk officer David Gall said the bank had cooperated with ASIC's review of the issue but that it would be disputing its claims in court. "We do not agree with ASIC's claims, which means they will now be settled by a court process," Gall said in a statement.
ANZ and Westpac have also denied the corporate regulator's allegations.
The BBSW is the primary interest rate benchmark used in Australian financial markets to price home loans, credit cards and other financial products.
ASIC has alleged that NAB intended to create an artificial price for bank bills on 50 occasions between 8 June 2010 and 24 December 2012.
The regulator alleged that NAB had several products priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower.
The methodology used to calculate the BBSW was changed in 2013.