Commonwealth Bank has reached an in-principle settlement with ASIC under which it will acknowledge attempting “to engage in unconscionable conduct” and that it could not adequately monitor trading and communications of staff. The Federal Court must approve a settlement that will also mean CBA pays a $5 million penalty, $15 million to a financial consumer protection fund, and $5 million of ASIC’s costs.
The amount is half that paid by rivals National Australia Bank and ANZ in similar settlements related to alleged manipulation of the key rate.
Those settlements covered more breaches than those acknowledged by CBA. “In the course of trading on the BBSW market in Australia on five occasions between February and June 2012, CBA attempted to engage in unconscionable conduct in breach of the ASIC Act,” CBA said in a statement on Wednesday.
“CBA will also acknowledge it did not have adequate policies and systems in place to monitor the trading and communications of its staff in order to prevent that conduct from occurring.” CBA has also agreed to enter into an enforceable undertaking with ASIC, under which an independent expert will review its BBSW business.
The enforceable undertaking would be the second in two weeks to which CBA has agreed following the APRA report that slammed the bank as complacent and blinded to threats in its business.
Ratings agency Fitch this week downgraded CommBank’s outlook for its long-term debt default risk from stable to negative, citing concerns management will shift focus to regulatory issues at the expense of the bank’s ongoing operations.
At 10.40am AEST, CBA shares were down $2.10, or 2.9 per cent, at $71.40.