News: NAB UPDATE 1-Australian court finds Westpac did not manipulate benchmark rate

• ASIC had accused big four banks of manipulating BBSW rate
• Westpac only bank to challenge case in court
• Westpac acted unconscionably but didn't rig BBSW rate-judge

(Adds judge's comments, background)

Westpac Banking Corp (WBC) did not manipulate a key rate in order to boost profits, an Australian court ruled on Thursday, rejecting charges levelled by a regulator and handing a rare bit of positive news for the scandal-tainted financial sector.

In a series of civil lawsuits, the Australian Securities and Investments Commission (ASIC) had accused the country's "big four" banks of rigging the Bank Bill Swap Rate (BBSW)- a benchmark interest rate in Australia used to price trillions of dollars of assets - to inflate their profits.

In 2016, ASIC alleged Westpac rigged the BBSW to inflate profits from 2010 and 2012. Westpac is the only one of the top four lenders that chose to fight its case in court instead of settling with the regulator.

"In summary, I have rejected ASIC's case," Justice David Beach said in delivering the judgment in Melbourne. However, the judge also said Australia's second-largest bank had engaged in unconscionable conduct.

The decision comes during an embarrassing public inquiry into the country's highly-concentrated banking sector that has seen billions of dollars wiped from lenders' collective market values and exposed them to massive fines.

Besides Westpac, the nation's top banks are Commonwealth Bank of Australia (CBA) , Australia and New Zealand Banking Group Ltd (ANZ) and National Australia Bank Ltd (NAB) .

ASIC had argued that communications within the bank and with external traders that included expletive-ridden exchanges between traders captured in email records and telephone recordings showed them boasting about how much money they had made from BBSW fixes.

"But many of these communications are open to competing interpretations, particularly when understood in context ... where there has been uncertainty as to what was said or what was meant or conveyed after considering the context and all relevant circumstances, I have resolved that uncertainty in Westpac’s favour," the judge added.

"I have also concluded that by reason of inadequate procedures and training, Westpac contravened its financial services licensee obligations," the judge said

Westpac shares were almost unchanged after the verdict, down 0.5 percent by midday on Thursday.