ANZ was seen by the commission as the most aggressive of the banks that pitched the swaps and paid $18.5 million in a negotiated settlement.
Because of the "scale of the breaches involved as well as the bank's previous offending" the commission said it chose to seek declarations that ANZ's conduct breached the Fair Trading Act.
Incoming Chief High Court Judge Geoffrey Venning made such a declaration yesterday.
He said ANZ engaged in conduct that was misleading to some customers by understating some of the risks or overstating some of the benefits of interest rate swaps.
The judge said making the declaration had a "practical utility".
Apart from the public censuring of ANZ, the declaration would be material should the bank come back before the court for a further breach of the law.
It would also deter ANZ, other banks or commercial entities from similar conduct and confirm to the public and commercial community the commission was willing to move to enforce the law, Justice Venning said.
The commission alleged four of ANZ's representations over the swaps to customers were misleading.
The first was whether the swaps fixed the overall cost of borrowing and the regulator said this was misleading because while they fixed interest, they did not fix the margin the bank charges.
ANZ has admitted that margins increased for some affected customers, the High Court at Auckland heard yesterday.
The second allegation was that the bank represented that break fees for the swaps were the same as those for fixed-term loans.
ANZ admits that these fees were calculated differently.
While the commission also alleged customers were misled over representations about the monitoring of the swaps and their suitability, this was denied by ANZ.
• Swaps: A financial derivative product that allows borrowers to manage the interest rate exposure on their borrowing.
Who paid what?
• ANZ - $18.5m
• ASB - $3.2m
• Westpac -$3.2m
