NAB settles rate-rigging claim for $50m

National Australia Bank has reached a settlement over rate-rigging allegations brought by the corporate regulator.

NAB CEO Andrew Thorburn. Picture: Adam Yip

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 about $50 million in penalties and costs.

Under the settlement, agreed late last night, NAB will admit to 12 counts of unconscionable conduct, significantly fewer than the 50 counts claimed by Australian Securities & Investments Commission 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 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 also donate $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 spokesman 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 stand alone in the spotlight of prolonged scrutiny over its 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, but maintains 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.

Meanwhile, 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 will refer ASIC’s settlements with NAB and ANZ to a separate hearing.