NAB settles rate rig claims in $50m deal with ASIC

NAB will admit to breaching the law in a $50 million settlement reached with ASIC late on Friday night.

NAB chief Andrew Thorburn at the NAB George St Sydney Branch. . Annual results for big Aussie bank NAB. Pic Stephen Cooper

National Australia Bank has reached a settlement over rate-rigging allegations brought by the corporate regulator, in a deal that will see the bank admit to breaching the law, and pay around $50 million in penalties and costs.

Under the settlement, agreed on Friday night, NAB will admit to 12 counts of attempted unconscionable conduct, significantly fewer than the 50 counts claimed by Australian Securities and Investments Commission (ASIC) court filings.

NAB will admit that on 12 occasions in 2010 and 2011 its employees, in the course of trading in the bank bill swap rate (BBSW) market, attempted to engage in unconscionable conduct in breach of the ASIC Act.

It will also admit to breaching licence obligations under the Corporations Act.

Subject to court approval, the bank will pay a $10m penalty, and ASIC’s costs of $20m. It will donate a further $20m to a financial literacy program nominated by ASIC, with the payments to be recognised in NAB’s accounts for fiscal 2017.

Announcing the deal on Friday night, NAB chief executive Andrew Thorburn recognised the bank’s conduct failures.

“We accept that we did not meet the high standards of professional conduct that ASIC, the community and NAB expects of itself, in the market during [June 2010 to December 2012],” he said.

It is believed NAB’s announcement of the deal, at a time late on Friday traditionally used to bury bad news, caught ASIC officials by surprise.

An ASIC spokesperson last night said: “Yes, I can confirm there is an agreement, but it is important to note it is still subject to court approval and therefore the details must remain confidential for now.”

The deal, which follows on the heels of a similar agreement between ANZ and ASIC, leaves Westpac alone on track for a court trial.

That hearing, which has been pencilled in to begin on Tuesday, means Westpac will bear the full spotlight of prolonged courtroom scrutiny over alleged market manipulation.

Talks between ASIC and Westpac are set to continue over the weekend, although at this stage the bank remains prepared to begin the case on Tuesday. Westpac has the smallest number of alleged breaches, at 16.

Meanwhile, NAB has maintained it has a stronger legal position than the other banks targeted by ASIC because at the time of the alleged market manipulation between 2010 and 2012 its treasury desk was separate from its trading desk.

NAB and ANZ are expected to front the Federal Court on Monday, where the details of their agreement will be received for review and formal approval.

It is expected Justice Jonathan Beach, who has consistently wanted to press ahead with the case, will refer ASIC’s settlements with NAB and ANZ to a separate hearing in order to minimise any delay on the Westpac judgment.

NAB’s settlement will protect it from further public exposure of an aggressive trading room culture, which has already been thrown into the spotlight by the case.