SYDNEY: Westpac Banking Corp won vindication of its decision to fight accusations its conduct in handling of a key rate was unconscionable as an Australian court fined it AUS$3.3 million (US$2.4 million), far less than the sum sought by a regulator.
A federal court judge largely cleared Westpac in May of accusations it interfered with negotiations for an important internal price-setting measure called the Bank Bill Swap Rate (BBSW), but said its actions still amounted to unconscionable conduct.
The bank and the Australian Securities and Investments Commission (ASIC) have since been haggling in court over Westpac's fine, and on Friday the judge rejected the regulator's argument that the bank be made to pay AUS$58 million.
"I have to apply the law as it was at the time, not what it should have been," the judge, Jonathan Beach, wrote in his judgment.
The relatively small penalty for the AUS$95 billion market capitalization company brings a rare bright spot to an industry facing a daily drumbeat of negative publicity as a public inquiry into financial misconduct grinds on.
The inquiry has also drawn criticism about the effectiveness of Australia's financial regulators, putting pressure on ASIC to show it can rein in the industry.
For the BBSW case, ASIC brought lawsuits against all of the country's Big Four lenders alleging they rigged the rate but Westpac was the only one of the four to defend the case.
The other three, Commonwealth Bank of Australia , Australia and New Zealand Banking Group Ltd and National Australia Bank Ltd , agreed to settle before the matter went to hearings, and pay fines totaling AUS$125 million.
Justice Beach said ASIC's argument that Westpac should pay AUS$58 million for 58 instances of wrongdoing had "all the irreconcilable atonality of a Schoenberg composition", an apparent reference to the 20th century expressionist composer Arnold Schoenberg.
A Westpac spokesman declined to comment on Friday. An ASIC statement quoted Commissioner Cathie Armour welcoming the decision, and saying: "ASIC's actions have led to these successful court outcomes, and also contributed to new benchmark manipulation offences being enacted by Parliament".
(Reporting by Byron Kaye; Additional reporting by Paulina Duran; Editing by Stephen Coates and Muralikumar Anantharaman)