You are here

Australian banks 'appalling behaviour' towards rate probe: watchdog

Thursday, June 4, 2015 - 11:36
AUSBANK040615.jpg
Australia's corporate watchdog has described the behaviour of the country's biggest banks towards an investigation into possible rigging of the benchmark interest rate as "absolutely appalling" and demanded more cooperation.

[SYDNEY] Australia's corporate watchdog has described the behaviour of the country's biggest banks towards an investigation into possible rigging of the benchmark interest rate as "absolutely appalling" and demanded more cooperation.

The Australian Securities and Investments Commission (ASIC) is examining trading practices from 2007 to 2013 in interbank lending, known as the bank bill swap rate market.

Its US and British counterparts in May fined six major global banks a total of nearly US$6 billion for rigging the foreign exchange market and Libor, the London interbank offered rate.

ASIC chairman Greg Medcraft said the financial institutions were delaying their responses to requests for information and were also reluctant to hand over chat room transcripts. Traders' discussions in chat rooms were key to the US and British investigations.

"The behaviour in many institutions in this has, frankly, been absolutely appalling," Medcraft told the Senate Economics Legislation Committee late Wednesday.

"There have been significant delays caused by a legalistic approach to our request for information. I will place that on the public record. It is delaying our investigations." He declined to name the institutions.

One of Australia's biggest banks ANZ in November suspended seven traders pending the outcome of the ASIC investigation, which could result in civil and criminal penalties.

ANZ said in a statement that as the ASIC investigation was ongoing, "we have nothing further to add at this stage".

ASIC in 2013 and 2014 accepted enforceable undertakings - which are administrative sanctions - from global banks RBS, UBS and BNP Paribas. They were fined between A$1 million (S$1.04 billion) and A$1.6 million for potential misconduct involving the bank bill swap rate.

Medcraft said ASIC was placing "enormous emphasis" on the inquiry, and confirmed his organisation had committed 20 percent of its investigative resources into looking into the issue.

"Some of them, we are finding, have a very defensive approach to giving us information and contesting us," Medcraft said of the banks being probed.

"We encourage them to be very open and cooperative, because we are actually trying to help them. We want what they want - to have people having confidence."

AFP