Australian regulator reprimands BNP Paribas over rate fixing

SYDNEY Tue Jan 28, 2014 3:17am EST

The BNP Paribas plaque is seen on the roof of one of their main banks in central Paris February 18, 2013. REUTERS/Charles Platiau

The BNP Paribas plaque is seen on the roof of one of their main banks in central Paris February 18, 2013.

Credit: Reuters/Charles Platiau

SYDNEY (Reuters) - French bank BNP Paribas SA (BNPP.PA) has been censured by Australian regulators after revealing its traders tried to influence the setting of the country's benchmark inter-bank interest rate, the latest in a string of scandals over global rates setting.

BNP will make a A$1 million ($874,800) donation toward promoting financial literacy after an internal investigation found communications showing derivatives traders in Singapore and BNP's Sydney treasury desk discussed preferred settings for the Bank Bill Swap Reference Rate (BBSW), the Australian Securities and Investment Commission (ASIC) said on Tuesday.

The review concluded the maximum possible benefit for BNP was A$760,000 during the period under review from 2007 to 2010 and an "insignificant" impact on the market as a whole.

"We've self-reported this facts to ASIC. BNP Paribas made no admission of wrongdoing in relation to the matters, but we acknowledge ASIC's concern for the potential problems," a spokeswoman for BNP said.

"So we've agreed to enter a five-year enforceable undertaking with ASIC to ensure participation in relation to the setting of Australia interest rate benchmarks."

Global regulators have been reforming rate-setting practices after Barclays Plc (BARC.L), UBS AG (UBSN.VX), Royal Bank of Scotland Group Plc (RBS.L) and others were hit with fines totaling billions of dollars for rigging the London Interbank Offered Rate, known as Libor. Libor and other similar inter-bank rates are used to price home loans, credit cards and other financial products worth trillions of dollars.

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.

Other similar censures by ASIC, known as enforceable undertakings, are likely. UBS has previously said it was investigating potential "misconduct" in submissions for BBSW.

ASIC officials declined to comment on other investigations still underway.

($1 = 1.1432 Australian dollars)

(Reporting by Lincoln Feast and Maggie Lu Yueyang; Editing by Matt Driskill)

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