CBA cops $25 million for BBSW rigging

Commonwealth Bank will fork out $25 million to settle its bank bill swap rate rigging scandal, adding to the bank's pile of settlement payouts.

CBA will acknowledge it "attempted to engage in unconscionable conduct in breach of the ASIC Act" while trading on the BBSW market on five occasions from February to June in 2012.

The bank will also concede its policies and systems were inadequate for monitoring staff trading and communication to prevent the situation.

The settlement includes a $5 million penalty, $15 million to a financial consumer protection fund and $5 million to ASIC for its litigation and investigation costs.

FY18 bottom line is expected to take a hit from the $25 million settlement, CBA said.

It has also agreed to enter into an enforceable undertaking with ASIC. Under the EU an independent expert will review policies, training and monitoring for its BBSW business.

CBA and ASIC will apply to the Federal Court, seeking approval of the settlement.

This adds to the $118.5 million in refunds, including interest, that the bank admitted to have allocated to its fee for no service clients, as at December end, in its Royal Commission submissions.

ASIC initiated civil penalty proceedings against CBA in January, alleging it traded in the bank bill market with the purpose of affecting the yield and the BBSW to its advantage, and to the disadvantage of parties with an opposite exposure to the security.

CBA disputed the allegations in late February.

"We do not believe our employees have engaged in unlawful conduct, nor have they done anything that would have adversely impacted the efficiency and integrity of financial markets as alleged, or at all," it said at the time.

ANZ Bank has also come under fire for BBSW manipulation. It struck a confidential and in-principle agreement with ASIC in October last year.

Read more: CBACommonwealth BankANZASIC BBSW
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