Deadline in rate swap cases moves to mid-year

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The Commerce Commission has deferred its call on whether to lay proceedings against three banks involved in its interest rate swaps investigation as it is assessing new information in the cases.

The regulator said in December that it expected to file legal action against ANZ, ASB and Westpac by March over their sales of interest rate swap contracts to rural customers.

These swaps, according to the commission, are a financial derivative product that allows borrowers to manage the interest rate exposure on their borrowing.

While traditionally offered to corporates, the commission says that from 2005 they were offered by some banks to rural customers throughout New Zealand. In August 2012, the commission began looking into whether these interest swaps were misleadingly marketed.

The commission said yesterday that the March time frame for charges had become unrealistic.

The regulator said it had been able to "actively advance its investigation" and had used new powers to interview current and former bank staff.

"This is a particularly complex case where different facts and circumstances apply to each of the three banks involved," the commission said.

"The commission now anticipates making a further announcement mid-year, once it has furthered discussions with each bank about the information it holds and any possible resolution of the commission's concerns.

"The commission has entered into a 'standstill agreement' with each bank that means there will be no barrier to any proceedings brought by the commission as a result of taking this extra time."