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Westpac says will defend itself in regulator rate-rigging lawsuit

Reuters
A woman walks past an illuminated logo for Australia's Westpac Bank in Sydney, Australia, September 6, 2017. REUTERS/Steven Saphore/Files

By Byron Kaye

SYDNEY (Reuters) - Australia's Westpac Banking Corp said on Monday it plans to defend itself in a lawsuit brought by the nation's corporate regulator accusing it of rigging a key interest rate - unlike two rivals who have agreed to settle similar cases.

Australia and New Zealand Banking Group Ltd (ANZ) and National Australia Bank (NAB) reached settlements with the Australian Securities and Investment Commission (ASIC) last week.

Westpac, the country's No. 2 lender, has not changed its position and will defend itself against the allegations, a bank spokesman told Reuters on Monday.

At a short court hearing on Monday, ASIC lawyer Philip Crutchfield said in relation to Westpac, "that matter is proceeding", according to a transcript of the hearing.

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The hearing will continue on Tuesday.

ASIC filed a civil lawsuit against the three lenders last year, alleging they had rigged Australia's primary interest rate benchmark, the bank bill swap rate, for profit between 2010 and 2012. The rate is used in Australian markets to price home loans, credit cards and other financial products.

ANZ and NAB's settlements save them a lengthy, expensive and potentially embarrassing hearing, although analysts have said that admitting wrongdoing could open them to possible class action lawsuits from shareholders.

The rate-rigging allegations, which have already drawn lawsuits from U.S. funds, are but one of several scandals engulfing Australia's highly-concentrated banking sector.

NAB said on Friday that as part of the settlement it has agreed to a A$10 million ($7.7 million) penalty, A$20 million in costs to ASIC and a A$20 million donation to a financial consumer protection fund. ANZ has said it will release details of its settlement soon.

Westpac shares were up 0.6 percent in mid-session trade, in line with the broader market and other banks.

($1 = 1.3028 Australian dollars)

(Reporting by Byron Kaye; Additional reporting by Tom Westbrook; Editing by Edwina Gibbs)