Australia's major banks face U.S. class action over rate rigging

Thu Aug 18, 2016 4:56am EDT
 
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By Swati Pandey and Cecile Lefort

SYDNEY (Reuters) - Australia's four biggest banks said on Thursday they were among 17 global lenders being sued by U.S. funds for alleged benchmark interest rate rigging, denying the claims and pledging to contest the action.

The suit follows ongoing court action on the matter by Australian regulators, and comes amid increasing scrutiny by global watchdogs on potential market manipulation. Recent investigations have ensnared major global lenders and led to hefty fines.

In the latest suit naming National Australia Bank (NAB.AX: Quote), ANZ Banking Group (ANZ.AX: Quote), Westpac Banking Corp WBC.AX and Commonwealth Bank of Australia (CBA.AX: Quote), two U.S.-based investment funds and an individual derivatives trader have brought a class action in a writ filed in United States District Court for the southern district of New York on Aug. 16.

Allegations center around the banks making hundreds of millions of dollars in profits by setting benchmark bank bill swap rates (BBSW) at levels that benefited their trading books, according to the filing, supplied to Reuters by one of the banks.

National Australia Bank, Australia's top lender, said in a statement it did not agree with the claims, while fourth-biggest ANZ Banking Group said it would vigorously defend the legal action.

No.3 lender Westpac said it was aware that a class action had been filed but was not formally served with any proceedings. "Westpac denies the allegations in this claim and, if served with the claim, will defend those allegations vigorously."

These three are already facing charges laid by the Australian Securities and Investments Commission (ASIC) for allegedly manipulating the same benchmark interest rates. All three have refuted the claims.

A spokeswoman for Commonwealth Bank of Australia - not named in the Australia action - said the nation's second-largest lender would defend the claim filed in court in the United States.   Continued...

 
A man walks past a branch of the Australia and New Zealand Banking Group Ltd (ANZ) in Sydney October 29, 2013.  REUTERS/David Gray/File Photo