ANZ cleared of rate fixing

The company has come under the microscope for interest rates before, but this time it's different.

Owen Raszkiewicz

Owen Raszkiewicz is a Motley Fool Contributor. Owen has been a Contributor since 2013, having also spent time as a Fool writer/analyst. He also worked as an Investment Analyst at Zenith Investment Partners, Australia's top research house specialising in managed funds. Owen has appeared on Channel 10's The Project and was invited on the BBC. He holds a Masters of Applied Finance, Masters of Financial Planning, Bachelor of Technology, Advanced Diploma of Financial Services and Diploma of Mortgage Broking Management. In addition, Owen has passed Level 1 of the Chartered Financial Analyst (CFA) Program. He has taken the Banking + Finance Oath (BFO). When he is not writing, Owen is Managing Director of Rask Finance, an Australian financial education company. You can email him: [email protected].

Published June 17, 2013 11:30 am AEST

ANZ (ASX: ANZ) is heralded as Australia's most profitable bank for its size, constantly having the best return on equity out of any of the big four for domestic lending, however its overseas operations have just proved to be costly. ANZ decided to keep interest rates on hold last week, which was unsurprising given the RBA's decision, but perhaps domestic interest rates aren't the only thing to be worried about.

On Friday, the Monetary Authority of Singapore (MAS) alleged some of Australia's banks have been implicated in an interest rate rigging scandal which has resulted in ANZ and Macquarie (ASX: MQG) being liable to set aside an extra S$100 million to S$300 million in reserves.

Although MAS said that the actions did not produce any conclusive evidence that the rates were successfully manipulated, it did say that "a number of traders at banks lacked professional ethics". UBS (NYSE: UBS) and Royal Bank of Scotland (FTSE: RBS) were forced to set aside between S$1 billion and S$1.2 billion.

ANZ has said a number of employees were engaged in "inappropriate" behaviour and "disciplinary action has been taken with a small number of staff".

The results and consequences will have no impact on ANZ's Singapore operations but has changed its rate setting process and training standards as a result.

Foolish takeaway

ANZ's 'Super Regional Strategy' is what sets it apart from its domestic rivals like NAB (ASX: NAB) and the Commonwealth Bank (ASX: CBA) but it still has challenges ahead of it. Domestically, it remains the most competitive bank despite having one of the lowest interest rate mortgages out of the big four. Investors who are seeking growth, income and security could do worse than ANZ, particularly as the company's stock price has dropped over 10% in recent weeks – perhaps it's time to grab a bargain.

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Motley Fool contributor Owen Raszkiewicz does not own shares in any of the companies mentioned in this article.

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