Commonwealth Bank of Australia (CBA), much like the big Australian banks, could have problems with the Australian Securities and Investments Commission (ASIC) on charges of rigging interest rates. No official investigation has commenced, but the bank, which is the biggest in Australia, is preparing itself for a lawsuit similar to the one against its major competitors. National Australia Bank has confirmed on its website that it is now part of an investigation about industrywide bank bill swap rates being undertaken by ASIC.
Meanwhile, ASIC has already confirmed that it is investigating the practices of Westpac, as well as ANZ Banking Group. The investigations are said to inspect for market manipulation and unacceptable conduct which could have the effect of damaging the integrity of the financial markets in Australia.
National Australia Bank (NAB) has reported on its website that the allegations concern trading in the bank bills market during the period June 08, 2010 and December 24, 2012.
Though class action lawsuits cannot be eliminated but impact of the claims is yet to be clearly ascertained. An official investigation into Commonwealth Bank of Australia has not commenced and there is little news about the progress of the case against the bank. If the bank bills swap rate is found to be tampered, the impact could be in the pricing of billions of dollars of loans. This would also hurt the confidence on the long-term outlook.
Lately, there was news about ASIC levying criminal charges against a former Commonwealth Bank financial planner, Ricky David Gillespie, on forging customers’ signatures on application forms and other documents.
Thus, the above allegations are only part of a number of issues that the big four banks need to address. There have been areas like intensive competition and higher charges for bad debts etc. that need attention given the series of record earnings’ results but humungous pressure on profit growth going forward. The banks have for a long time been regarded as some of the best investments in Australia, but this perception is being now challenged in the recent past.
.PNG)
CBA Daily Chart (Source - Thomson Reuters)
On the above issue, Commonwealth Bank of Australia says that it is helping ASIC with its enquiries and probably has a nervous wait ahead for the regulator to frame legal cases against major lenders for financial interest rate rigging.
National Australia Bank has now become the third of the big four to be charged by the ASIC of manipulating the bank bill swap rate on at least 50 occasions (and NAB is set to fight the case) and Commonwealth Bank of Australia appears to be the only major bank so far to be clear of legal proceedings. All the banks already the subject of legal proceedings have vowed to contest the claims in court. ASIC did not respond to requests for comment and the Commonwealth Bank of Australia spokesperson refused to comment beyond saying that the bank was continuing to cooperate with and assist ASIC in its investigation.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in: BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.