The Australian Securities and Investments Commission (ASIC) has started legal proceedings against the Commonwealth Bank of Australia (CBA).
The CBA, the country’s largest bank, stands accused of manipulating the bank bill swap reference rate (BBSW) for profit on three separate occasions in 2012. The BBSW is the main interest rate benchmark used in Australian financial markets for the valuation of various financial products.
In a statement submitted to the Australian Federal Court on Tuesday, ASIC said: “ASIC alleges that on three specific occasions CBA traded with the intention of affecting the level at which BBSW was set so as to maximise its profits or minimise its losses to the detriment of those holding opposite positions to CBA’s.” The CBA rejects the allegations.
After several years of posting record profits, Australia’s big banks are facing a tough trading environment. A government-led inquiry into their practices is due to be released this year, as part of a widened effort toward tighter regulation of the banking sector.