Major bank will ‘vigorously defend’ ASIC allegations

One of Australia’s largest lenders has rejected allegations regarding bank trading and the bank bill swap rate (BBSW) levelled by the corporate regulator.

In an ASX update, ANZ says it will “vigorously defend legal action brought by ASIC”.

ANZ noted that since mid-2012 ASIC has been investigating the practices of 14 panel bank participants in the Australian interbank BBSW market from 2007 to 2012.

“ASIC’s statement of claim in relation to ANZ covers to the period March 2010 to May 2012,” the bank said.

“ASIC has advised ANZ that it has no concerns about the bank’s current market practices and ANZ notes there has been no allegation of collusion between it and other institutions.”

ANZ chief risk officer Nigel Williams said the group has cooperated fully with ASIC’s investigation “over many months, at a cost of many millions of dollars”.

“This includes actively seeking to resolve the Commission’s concerns since January 2015,” Mr Williams said.

“We believe the Commission’s statement of claim is based on a misunderstanding of how bank bill issuance and interest rate risk management operates and the limited case law which applies to this area,” he said.

“Our practices in the BBSW market were consistent with Australian market practices in wholesale financial markets and we reject ASIC’s characterisation of the transactions in question.”

Mr Williams said chat messages between traders is an issue that ANZ will continue to review, adding that the bank has already dealt with chats and behaviour that breach its code of conduct through internal disciplinary action against the individuals involved.

“Since June 2014, we have also engaged ASIC about chat messages between ANZ traders,” he said.

“We do not agree, however, with ASIC’s characterisation of the issues related to the chat messages. It is now for the courts to provide clarity on trading practices,” Mr Williams said.

ANZ noted that ASIC’s legal action is likely to take a considerable time to reach a resolution through the courts and the matter of penalties is uncertain.

Last month, ASIC chairman Greg Medcraft vowed to use his $80 million war chest to pursue the manipulation of the bank bill swap rate through the court system.

[Related: ASIC takes major bank to court]

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