Reserve Bank employee questioned whether ANZ had a funding problem, court told
The Reserve Bank’s appearance in an alleged rate-rigging saga has emerged during an ex-ANZ trader’s lawsuit over his dismissal for sending lewd messages.
The Reserve Bank has been dragged into an ex-ANZ trader’s case against his former employer after he claimed the actions of the ANZ trading floor prompted an RBA department official to make a rare inquiry about the bank’s funding.
Etienne Alexiou, who was sacked from his role as global head of the bank’s balance sheet trading department in September 2015, has been engaged in legal action against his former employer on and off for almost a decade.
ANZ maintains that it fired him over a series of lewd messages he sent to colleagues, many of which were this week aired in open court by the bank’s lawyers. Mr Alexiou admitted that the comments, in which he joked about “MILFs” and strip clubs, were offensive and derogatory.
But the former trader alleges the messages were just a pretext to get rid of him after he blew the whistle on alleged rigging of the bank bill swap rate (BBSW) at ANZ.
The BBSW, Australia’s short-term interest benchmark, is calculated by the buying and selling of bank bills each trading day.
A big player can theoretically influence the market – and therefore the rate set – by controlling the supply and demand of bills in those first few minutes. It then stands to make or lose millions of dollars.
Mr Alexiou alleges in court documents that in September 2011 he overheard an ANZ trader, Jason Pritchard, saying he was “going to slaughter the rate set” on a few occasions.
On September 30, Matt Morris, another ANZ employee, received a phone call from Matthew Boge at the RBA, who asked whether ANZ had a funding problem, according to court documents.
“The central bank of Australia called to enquire whether ANZ had a funding issue,” Mr Alexiou told the Federal Court on Thursday.
“In 18 years of global markets I’ve never known a central bank to call and ask if they (a bank) had a funding issue.”
Mr Alexiou claims he raised his concern about the word “slaughter” with Robert O’Callaghan, the then global head of fixed income at ANZ. He claims that Mr O’Callaghan later told him he had investigated and it was “all fine”.
In its filed defence, ANZ admits that Mr Boge said words to the effect that the RBA had heard the bank was selling one-month bank bills and asked whether it was related to a funding issue.
On Thursday, Mr Alexiou endured another tortuous day in the witness box in Federal Court in Sydney, as Kate Morgan SC – acting for ANZ – sought to highlight inconsistencies in his evidence and claims.
Many of her questions related to the term “slaughter”, and what Mr Alexiou told the corporate regulator and ANZ’s lawyers he thought it meant.
In an examination by ASIC, Mr Alexiou had previously said: “It’s not technical at all in nature, that term slaughter, but to me it means to unduly affect the rate and, you know, slaughter.”
Mr Alexiou, who was previously granted court protection from self-incrimination after admitting that he lied to ASIC without intending to, has one final morning of cross-examination.
Phillip Chronican, the former chief executive of ANZ in Australia, is scheduled to appear in the witness box on Friday.
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Originally published as Reserve Bank employee questioned whether ANZ had a funding problem, court told
