Australia and New Zealand Banking Group (ASX: ANZ) has been named as one of the big banks frustrating the corporate regulator's investigation into rate-fixing.
In reports in Fairfax newspapers, the Australian Securities Investments Commission (ASIC) has labelled ANZ's behaviour 'absolutely appalling'. That comes as ASIC Chairman Greg Medcraft told a Senate committee yesterday that the big banks were being very defensive, and causing significant delays over requests for information.
ASIC is conducting an inquiry into the fixing of important market interest rates, with several banks under the microscope.
One committee member, Labor senator Sam Dastyari named ANZ as one of the banks as being under investigation, and ANZ has already suspended several traders who are under investigation by ASIC. Senator Dastyari issued a blunt warning to the big four ANZ, Commonwealth Bank of Australia (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac Banking Corp (ASX: WBC), saying, "Internationally, the fines issued were in the billions. ASIC has the power to issue similar fines here."
Six major banks – Barclays Bank, JPMorgan Chase, Citicorp, Royal Bank of Scotland, UBS and Bank of America were fined a total of close to US$6 billion for their participation in manipulation of the foreign exchange market and LIBOR (London Interbank Offered Rate) interest rates. Barclays alone received a fine of US$2.4 billion while Deutsche Bank recently agreed to pay US$2.5 billion in penalties for manipulating interest rates as the fallout continues.
ASIC is investigating the manipulation of our bank bill swap rate (BBSW), which is used to set interest payments on hundreds of billions of dollars' worth of securities owned by investors. It is also used in determining mortgage rates for Australia's $1.5 trillion housing market. The corporate cop is also reported to be investigating currency fixing and conduct in commodities markets.
Given the recent financial planning scandals plaguing Commonwealth Bank, Macquarie Group Ltd (ASX: MQG) and both NAB and ANZ, and now this, it appears there's something rotten in the culture of our big banks. From their actions so far, it appears the banks have been dragging their feet on that issue as well.
Foolish takeaway
The key question though is whether ASIC will take strong action against the banks to set an example or whether the banks will receive a slap on the wrist. The problem if they don't, is that investors and consumers will lose confidence (if they haven't already) in the financial system and the regulators, with banks seen to be able to 'get away with it'.
