CBA delays BBSW trial, wants details of rate-rigging
Australian Financial Review Feb 2 2018 4:31 PM
James Frost
Commonwealth Bank has been granted more time to prepare its defence against allegations its traders had manipulated the bank bill swap rate (BBSW) for profit after its lawyers argued the Australian Securities and Investments Commission was yet to put all its cards on the table.
Kate Morgan SC, acting for the bank, made the request for additional time at a directions hearing in Melbourne's Federal Court after highlighting the bare-bones nature of the concise statement, noting The Australian Financial Review's reports that the regulator has a trove of evidence up its sleeve.
"We've only got the concise statement that identifies up to three days of relevance, in the media we've seen other significant allegations being made in relation to the history and if that's included in the statement of claim we will need a significant period of time," Ms Morgan said.
Justice Jonathan Beach said the bank would have three months to prepare its defence following ASIC's lodgement of a statement of claim.
Documents filed with the Federal Court show ASIC alleges Commonwealth Bank traders traded with the intent of manipulating the rate on February 3, February 9 and March 15, 2012.
The regulator claims this practice of interfering with the BBSW during the rate set window in order to benefit the bank's position was known or ought to have been known by senior management at the bank.
A trial is expected to be highly damaging for the Commonwealth Bank as it looks to restore its reputation in the aftermath of the financial planning and life insurance scandals. The trial is poised to kick off as the 12-month Hayne Royal Commission hits its stride.
ANZ and NAB settled allegations with the regulator, eventually owning up to a smaller number of breaches and less serious admissions. Each bank made payments of $50 million to settle the case.
Westpac's decision to take the regulator on has generated dozens of headlines focusing on the conduct of the banks traders including Colin "The Rat" Roden and Sophie "The Perfumed Steamroller" Johnston.
The Commonwealth Bank employees who traded bank bills during this period have also become known through the Westpac hearings with a number of references to Mark "The Powerful Owl" Hulme and Garfield "Bad Kitty" Lee emerging during the trial.
On Wednesday, the Commonwealth Bank released a statement responding to a Chanticleer column in the Financial Review speculating the total cost to shareholders for fighting ASIC over the BBSW claims and AUSTRAC for money laundering breaches could be more than $700 million.
The bank said the board will consider a range of factors "including any potential penalty" in determining whether it will make provisions in its half-year results, which are due to be presented by Commonwealth Bank chief executive Ian Narev on February 7.