NAB settles for $50 million in ASIC interest-rate manipulation case
The bank must recognise licence obligations breaches and agree to an "enforceable undertaking" with ASIC.
Australia's third largest lender, National Australia Bank (NAB), settled a $50 million case of alleged interest rate manipulation with corporate watchdog, the Australian Securities and Investments Commission (ASIC).
ASIC filed a lawsuit in 2016, alleging three of Australia’s leading banking institutions, including NAB, had illegally tampered with the bank bill swap rate (BBSW) in an effort to gain profits between 2010 and 2012.
The BBSW is the primary short-term interest rate used to price home loans, credit and other financial products.
NAB will pay a $10 million penalty, $20 million in damages to ASIC and donate $20 million to a financial consumer protection fund as part of its conceded settlement agreement, subject to court approval.
NAB must also admit its employees attempted to engage in "unconscionable conduct" on 12 different occasions during 2010 and 2011, in violation of the ASIC Act while trading within the BBSW rate market.
The bank must recognise its license obligations breaches and agree to an "enforceable undertaking" with ASIC.
"We accept that we did not meet the high standards of professional conduct that ASIC, the community and NAB expects of itself, in that market during that period," NAB chief executive Andrew Thorburn said in a statement.
NAB's settlement will be lodged with the federal court for approval, which may take weeks to finalise.
Earlier this week, ANZ settled on the first day of the federal court trial over the interest rate rigging scandal.
Westpac is the only remaining institution left to stand trial, originally slated to go on for five months.
Interest-only products have been under heavy scrutiny, with the Australian Prudential Regulation Authority placing a 30% cap on new interest-only lending. Now, ASIC has flagged a review of interest-only lending.