Australia watchdog censures RBS over interest rate setting

An internal RBS investigation found evidence that derivatives traders discussed preferred settings for the Bank Bill Swap Reference Rate (BBSW), the Australian Securities and Investment Commission (ASIC) said.

“Submitters openly acknowledged preferences and, at times, solicited preferences,” according to the censure document, adding a dedicated chat-room ‘BBSW rate set’ was used for such communications during October 2009 and November 2010.

RBS said it had voluntarily reported to the watchdog and did not admit to any wrong- doing.

“While there has been no admission of wrongdoing by the bank, it acknowledges ASIC’s concerns,” RBS said.

The internal RBS review concluded the maximum possible benefit for the bank was A$810,000 (£445,311) during the period under review, and the activity had an “insignificant” impact on the market as a whole. RBS withdrew from the BBSW submission panel in April 2012.

The censure document said RBS would take “remedial measures”, including reviewing its communications surveillance systems and processes.

The bank will also make a A$1.6m donation toward promoting financial literacy, ASIC said.

Earlier this year, ASIC censured French lender BNP Paribas after revealing its traders had tried to influence the setting of the inter-bank interest rates.

Global regulators have been reforming rate-setting practices after Barclays, UBS, RBS and others were hit with fines totalling billions of dollars for rigging the London Interbank Offered Rate, known as Libor.

Last year, Australia scrapped its BBSW rate-setting mechanism after an exodus of banks from the panel, the first major market to dismantle the tarnished structure.