Westpac has been fined $3.3 million for unconscionable conduct in the way its traders handled a key rate for several years.
The Australian Securities and Investments Commission had sought a penalty of $58 million in a civil lawsuit against Australia's second largest lender, but the Federal Court on Friday ruled that was too high.
Westpac was accused of rigging the bank bill swap rate from 2010 to 2012.
The Federal court cleared the bank in May of most accusations but upheld a charge of unconscionable conduct.
Rivals National Australia Bank and ANZ had paid $50 million to settle similar legal action brought by the corporate regulator over alleged manipulation of bank bill swap rates.
CBA has agreed to pay $25 million to settle its action in a case involving fewer breaches.