Unless you've been hiding under a considerably sized rock in recent times, you'll have heard all about how ANZ, Westpac and National Australia Bank (NAB) have allegedly been fiddling the bank bill rate – a charge they are each contesting. Now the Australian Securities and Investments Commission (ASIC) have asked each of them to settle claims lodged against them, something that they are loathe to do.
This looks to be leading towards three separate court showdowns between ASIC and each of the banks, for what the Australian Financial Review notes as 'unconscionable conduct and market manipulation' with regard to how the daily bank bill swap rate was set up. So how is this likely to play out?
Battle of the banks
At CAPE, we're big believers in the transparency of customer-owned banking, and this is something that the big banks are trying to convey, too. Hence, to see what has supposedly been happening adds yet another smear to their name. The forthcoming cases are not for the small claims court, as ASIC are looking for a staggering AU$1 million per infringement.
To see what has supposedly been happening adds yet another smear to the big banks' name.
This means that ANZ could be forced to cough up $44 million, with Westpac being stung to the tune of $16 million. It's NAB, though, that could be hit hardest, with ASIC after a whopping $52 million from the banking giant, with the Australian Financial Review saying that there is little chance of an out-of-court settlement at this stage.
Courting disaster?
ASIC, it seems, are keen to avoid the courts if they can, what with the length of time each individual case is likely to take, as well the monstrous costs that will be involved – especially against the big-hitting banks. The banks look more willing to fight it out in the courtroom, with each of them budgeting tens of millions of dollars that would otherwise have been used to settle outside. To illustrate, ANZ offered ASIC $20 million to settle things, but ASIC refused, holding out for $100 million. ANZ baulked at the bigger figure, and so lawsuits are now rustling. It's not likely to be head until at least a year from now, so it's easy to see why ASIC wanted a quick solution.
"[I'd rather that] than have a lengthy court case that may go on for years. As a banker, I never like spending money on legal fees," said ASIC chairman Greg Medcraft.
The whole ugly affair is yet another example of the money-grabbing behaviour of Australia's biggest banks. Why not give them a wide berth and take a look at customer-owned banking? Unlike the fat cats in charge of the Big Four, any profit we make will be filtered to you as one of our members, so get in touch with us today to free yourself of the clutches of the selfish big boys.
