ANZ was one of three banks, including NAB and Westpac, which faced a trial on allegations by the Australian Securities and Investments Commission (ASIC) that they manipulated the bank bill swap rate (BBSW).
The BBSW is a key interest rate benchmark used by a bank to set their own rate for business and personal lending and ASIC alleges this was manipulated so they could charge more for their loans to boost their own profits.
ANZ reached the settlement just as the Federal Court trial was about to commence in Melbourne on Monday morning.
Counsel for ASIC, John Karkar, QC and counsel for ANZ, Alan Archibald, QC, appeared before Justice Jonathan Beach for six minutes and said the bank's agreement needed to be documented and asked for all the cases to be stood down for 48 hours to enable the documents to be completed.
The request was granted and the hearing was stood down until Wednesday morning.
ANZ's and ASIC's settlement is an "in-principle" agreement at this stage, and the parties are currently negotiating final details. Neither has confirmed the settlement amount or whether ANZ will admit wrongdoing.
ANZ released a statement to the market confirming the settlement had been reached.
"ANZ today announced it has reached a confidential in-principle agreement with the Australian Securities and Investments Commission to settle court action relating to the Australian interbank BBSW market," the bank says.
Based on the in-principle agreement, ANZ said any financial impact will be reflected in the 2017 financial year results "and is largely covered by the provisioning held as at 31 March 2017".
ASIC had alleged ANZ had breached the law on 44 occasions between 2010 and 2012 and was seeking to have financial penalties imposed on all three banks along with a court declaration that they broke the law and engaged in unconscionable conduct.
It's also been reported that NAB is negotiating a settlement with ASIC and this would leave Westpac on its own in defending itself in court against the allegations.
ASIC is alleging that NAB created an artificial price for the BBSW 50 times between 2010 and 2012, while Westpac is accused of manipulating the price 16 times.
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