web analytics

CBA To Be Taken To Court Over Interest Rate Rigging Charges

Commonwealth Bank (CBA) is being sued Australia's corporate regulator over allegations that the bank manipulated the benchmark interbank borrowing rate. These new allegations against CBA is yet another headache for the new chief executive Matt Comyn.

The accusations against CBA is another addition to the series of interest rigging scandals to hit Australian banks. These interest rate rigging charges are another problem that CBA will have to deal with as the bank has faced other series charges in recent times including breaching the country's anti-money laundering as well a terror financing laws.

Earlier this week, the Australian Securities and Investments Commission (ASIC) confirmed it had filed a lawsuit against CBA for manipulating the market and unconscionable conduct with regards to the bank's involvement in setting the bank bill swap reference rate (BBSW) during the time period of January 31, 2012 to October 2012.

The BBSW is important because it is the key rate at which banks lend money to each other. The BBSW has a major impact on the country’s economy because it determines the rate and costs of business loans. ASIC is claiming that CBA attempted on three occasions to influence interest rates which would be beneficial to CBA at the expense of those holding positions opposite to the bank. ASIC is also claiming that the trading done by CBA during this time created an artificial price in the bank bill swap rate.

CBA is not the only Australian bank that has been accused of manipulating the BBSW. The three major banks in the country which are ANZ Bank, Westpac and National Australia Bank (NAB) have all been accused of BBSW manipulation and are all facing legal proceedings. NAB was hit with 12 instances of rigging the BBSW, Westpac was hit with 16 instances and ANZ was hit with 44 attempts which is the highest number of rigging charges amongst all four banks.

NAB and ANZ have reached a settlement with ASIC and have agreed to pay fines while Westpac opted to defend itself in a recent court hearing. CBA has decided to go the same route as Westpac.

In a statement, a CBA representative said

It is understood CBA will defend the matter. Commonwealth Bank disputes the allegations made by ASIC. As this matter is before the courts, it is not appropriate to comment further at this time


Related Articles

Singapore dollar to weaken on post Brexit concerns

The outcome of Brexit affected not only the currencies of the Euro zone countries, but also the currencies of South

Threat Of Banks Moving Due To Brexit Significantly Reduced

There were multiple media outlets and financial analysts predicting that Brexit would result in multiple banks and financial institutions moving

RBI Notifies Indian Banks To Step Up Cyber Security Efforts

As a measure against the rising threat of cybercrime, India’s Central Bank, the Reserve Bank of India has asked banks