Australia and New Zealand Banking Group (ASX:ANZ) will pay A$240 million to resolve five separate regulatory matters, including a major penalty over its involvement in a bond trading scandal. The settlement, reached with the Australian Securities and Investments Commission (ASIC), covers misconduct spanning several years and includes failures within its retail banking division that affected more than 65,000 customers.
The penalties comprise A$125 million related to the bond trading investigation, A$80 million for unconscionable conduct in the bank’s retail business, and A$35 million across three additional retail-related breaches.
ASIC criticises repeated failures
ASIC chair Joe Longo directly criticised ANZ for its repeated shortcomings, particularly in transparency and compliance. “Time and again, ANZ has fallen short,” Longo said during a media briefing, pointing to the bank’s lack of transparency with the government regarding its trading operations and noting that the regulator had acted to ensure accountability.
As the news broke, ANZ shares dipped further, trading down 0.7% to A$32.97 by 10:45am AEST, from a prior close of A$33.19.
Board backs transformation under new CEO
In response to the settlement and broader scrutiny, ANZ chairman Paul O’Sullivan said he was confident in new chief executive Nuno Matos who will lead a major transformation across the bank. O’Sullivan acknowledged the need for sweeping operational reform.
“The board believes that ANZ has great potential, but to realise that we must have a significant transformation in how we operate,” O’Sullivan told analysts. “And to do this, the board has appointed a new CEO who will drive a major transformation in Nuno.”
This transformation includes the recent announcement of around 4,500 job cuts — 3,500 permanent staff and 1,000 contractors — as part of a drive to eliminate duplication and streamline internal management structures.
Strengthening risk oversight and accountability
O’Sullivan said the workforce changes would strengthen execution and help address non-financial risks more effectively. “We need to streamline our management layers dramatically, to improve our decision-making and to strengthen our execution, all of which will assist our uplift in non-financial risk,” he said. “Whilst change is always difficult for the thousands of people who will continue to work at ANZ, this will result in a much better bank.”
He added that ANZ’s board and executive team were “100% committed” to the transformation process: “As chair, let me be really clear: the board, including Nuno, and our executive are 100% committed to delivering our transformation and making ANZ a better bank — we are all in.”
Market division under pressure
The fallout from the bond trading scandal has had a particular impact on ANZ’s markets business, with employees reportedly feeling their reputations have been damaged. O’Sullivan noted that many staff had raised concerns internally. In response, ANZ has made changes at the senior level, including the immediate departure of markets head Anshul Sidher.
Addressing the issues in non-financial risk management, Matos said the problems were “not widespread” and that corrective measures were underway. “We are making sure the non-financial risk issues in the markets business are well taken care [of],” he said. “I don’t expect these issues will impact our ability to generate revenue for our customers.”