ANZ Bank yesterday hurled a curveball at Westpac after it decided to settle the much-publicized rate-rigging case brought by the Australian Securities and Investments Commission.Only minutes before hearings were due to begin in the Federal Court ANZ revealed that it had entered a confidential in-principle agreement to settle the claim, which alleged the bank had engaged in unconscionable conduct and manipulation of the interbank Bank Bill Swap Rate market.National Australia Bank is believed to be close to settling the rate-rigging claims made against it by ASIC, with an announcement of a deal expected before the end of the week.The moves by ANZ and NAB will put pressure on Westpac to pull up a chair at the negotiation table, despite strong public defences trumpeted by the chairman Lindsay Maxsted and CEO Brian Hartzer in the last 18 months.While some traders named in the ASIC claim against ANZ have departed the bank in the last year, Westpac has strongly defended the conduct of its money market traders and rejected claims of ongoing compliance failures in its trading room.Hartzer has described the ASIC allegations of unconscionable conduct against his bank as misconceived and indicative of the regulator not understanding how money markets operate.Maxsted has also rejected ASIC's claim that Westpac engaged in "a pattern of behaviour" which unconscientiously took advantage of counterparties in the BBSW market.The strident defences put up by Westpac's most senior office-bearers might make it difficult for the bank to swallow demands from the regulator, which could include the removal of some staff and the introduction of new compliance programs.While the easy path for Westpac now is to negotiate a settlement, it might look awkward in light of the staunch comments made by Maxsted and Hartzer.The Federal Court hearings into the claims against the three major banks were deferred until Wednesday morning at the request of ASIC and ANZ.The terms of the settlement are likely to be made public before ANZ reports its full year results on Thursday, with the formal agreement required to be ratified by the court.The bank last year boosted its provisioning for non lending-related losses by A$24 million to $193 million. At least $60 million of that will be tapped to stump up compensation to ASIC.ASIC alleges in its statement of claim that ANZ traders knowingly manipulated BBSW rates between March 2010 and May 2012 to maximise gains and minimise losses on financial products priced off the swap rate.According to ASIC, ANZ's actions contributed to the setting of "artificial pricing" in the swap market that had detrimental effects on the positions taken by other market traders.Given ASIC's concerns about the fallout for other market participants, consumer advocates will be keen to learn whether the regulator will distribute most of the compensation to traders and retail investors who suffered some loss from the alleged rate-rigging practices.Under settlements reached large year with UBS, BNP Paribas and Royal Bank of Scotland over their alleged misconduct in the BBSW market, ASIC forced the three foreign-owned banks to contribute $3.6 million