NAB accused of BBSW rigging

Chat messages allegedly show a National Australia Bank trader discussing interest rate manipulation.

The claims against NAB follow action against ANZ in March and Westpac in April. Picture: Sam Mooy

National Australia Bank last night became the third of the big banks to be accused of interest rate rigging with the corporate watchdog alleging the bank tried to manipulate the BBSW at least 50 times.

The Australian Securities & Investments Commission filed a civil claim in the Federal Court in Melbourne against NAB alleging market manipulation and unconscionable conduct.

The corporate regulator cited “at least 50 occasions between 8 June 2010 and 24 December 2012” when NAB allegedly sought to fix the bank bill swap rate.

Federal Opposition Leader Bill Shorten swooped on last night’s decision by ASIC saying it further justified Labor’s demands for a royal commission into banks, saying the “evidence is growing by the day”.

ASIC’s claim against NAB is substantially abbreviated compared with previous Federal Court claims against ANZ and Westpac.

The regulator’s hand was forced into filing the claims against NAB because further delay would have barred any ­action on alleged behaviour dating back more than six years under statutes of limitations in the Corporations Act.

The statement sets out one incident of alleged BBSW ­manipulation by NAB on Decem­ber 22, 2011, when the bank had a 90-day BBSW rate set exposure of $1.9 billon.

It alleged NAB trader Hermeet Jajjhur sold 90-day Prime Bank Bills with a face value of $620 million in a way that would set the BBSW rate higher for that day — with his sales comprising 82.7 per cent of trading of that type made through brokers on that day.

In a discussion on instant chat messaging with fellow trader ­Michael Tsakiris the pair discuss a “1.9B set”.

“Don’t hold back though ... If its (sic) trading in little volume just keep pushing it,” Mr Tsakiris wrote to his colleague. “Who cares about 200M of stock ... we have a 1.9B set.”

“Yup,” Mr Jajjhur replied.

“Nice set at 47,” Mr Tsakiris concluded.

Last night, NAB issued a statement saying: “We do not agree ASIC’s claims.” But it did not elaborate on details of denials, only to emphasise the ASIC investigation was “industry wide”. “NAB has fully co-­operated with ASIC’s review and takes these allegations seriously.

“We do not agree with ASIC’s claims, which means they will now be settled by a court process.

“As part of ASIC’s investigation NAB has provided emails, instant chat messages and telephone conversations involving our employees. NAB retains this information as part of our business processes.”

The claims against NAB follow action against ANZ in March and Westpac in April.

ASIC is still continuing its investigations into Commonwealth Bank as part of its BBSW probe.

The BBSW is the reference rate used to price billions of dollars worth of business loans, derivatives and other securities throughout the Australian financial market. Between 2007 and 2013 the BBSW was set by a panel of 14 banks, including CBA, Westpac, NAB and ANZ, as well as international investment banks, which would bid at the rate at which they would lend money to each other.

It is claimed that “NAB’s trading in Prime Bank Bills … caused financial detriment or disadvantage to counterparties to BBSW reference products with NAB, was likely to cause financial detriment to any person who was a party to any BBSW referenced product with an opposite BBSW rate set exposure to NAB”.

Mr Shorten used the latest ASIC action to attack Prime Minister Malcolm Turnbull and his refusal to accept calls for a royal commission into banks’ behaviour.

“How many more people need to suffer and get ripped off before Mr Turnbull stops covering up for the banks?” Mr Shorten said in a statement.

“It is an insult to everyone who’s been ripped off.”