ANZ, Macquarie in rate-rigging scandal
Singapore’s monetary authority censured 20 banks from around the world for trying to rig benchmark interest rates and ordered them to set aside as much as $S12 billion at zero interest pending steps to improve internal controls.
The Australian body overseeing the setting of this country’s banking price gauge insists there will be no direct implications for the local benchmark, despite the naming of ANZ and Macquarie by Singapore authorities.
Australian Financial Markets Association executive director David Lynch said the local bank bill swap rate was ‘‘quite different’’ to either the Singapore or British interest-rate benchmarks.
‘‘It is a matter for Singapore – it is something outside our jurisdiction,’’ he said. ‘‘The benchmark that we have here is derived from quite a different methodology.’’
On Friday the Monetary Authority of Singapore alleged 133 traders tried to manipulate the Singapore interbank offered rate (SIBOR), swap offered rates (SOR) and currency benchmarks.
A spokesman for ANZ said the bank had identified behaviour from certain employees that was “inappropriate” but no one had been dismissed. “Whilst the MAS Review produced no conclusive finding that SIBOR, SOR and FX Benchmarks were successfully manipulated, they found the conduct of a number of traders at banks lacked professional ethics,” he said. “No one has been dismissed, however appropriate disciplinary action has been taken with a small number of staff.”
In response to what the MAS judged were inadequate risk procedures, the 20 banks must set aside additional statutory reserves with the central bank.
Macquarie and ANZ were part of a group of banks that will have to set aside between $S100 million and $S300 million with the central bank. This was less than the requirement imposed on banks seen to have made more serious breaches, with UBS, ING and Royal Bank of Scotland forced to set aside between $S1 billion and $S1.2 billion.
The document said Macquarie was not a contributing bank to the setting of benchmark rates, which are administered by the Association of Banks in Singapore.
ANZ said the requirement would not have a material impact on its Singapore operations and it had overhauled its rate-setting processes and lifted training standards. Macquarie declined to comment.
Frequently Asked Questions about this Article…
Singapore's Monetary Authority (MAS) censured 20 banks, including ANZ and Macquarie, after finding evidence that traders tried to manipulate benchmark rates. The MAS alleged 133 traders attempted to influence SIBOR, SOR and currency benchmarks, and ordered banks to set aside additional statutory reserves while they improve internal controls.
ANZ and Macquarie were required to set aside between S$100 million and S$300 million each with the Monetary Authority of Singapore as part of the reserve requirements imposed on the group of 20 banks.
No. The MAS review did not produce a conclusive finding that SIBOR, SOR or FX benchmarks were successfully manipulated. However, it found that the behaviour of a number of traders lacked professional ethics and that banks' risk controls were inadequate.
The Australian Financial Markets Association said Australia's bank bill swap rate is derived using a quite different methodology and that the Singapore findings are outside its jurisdiction. The article indicates there should be no direct implications for the local Australian benchmark.
ANZ said it identified inappropriate behaviour by some employees, that no one had been dismissed but a small number of staff faced appropriate disciplinary action, and that the S$100m–S$300m requirement would not have a material impact on its Singapore operations. ANZ also said it overhauled its rate‑setting processes and improved training standards.
According to the MAS document cited in the article, Macquarie was not a contributing bank to the setting of the benchmark rates administered by the Association of Banks in Singapore.
Banks judged to have made more serious breaches faced larger reserve requirements — for example, UBS, ING and Royal Bank of Scotland were forced to set aside between S$1 billion and S$1.2 billion. Overall, the MAS ordered the 20 banks to set aside as much as S$12 billion at zero interest pending improvements.
The key takeaways are that regulators are actively policing benchmark-setting conduct, banks implicated may face reserve requirements and reputational harm, and that Australian benchmarks were described as different and not directly affected by the Singapore findings. Investors should watch company statements and remediation steps (process overhauls and training) reported by banks like ANZ and note any material financial impacts disclosed by the firms.
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