SYDNEY: ANZ Group agreed to pay A$240 million (RM672 million), the Australian corporate regulator’s largest-ever penalties against a single entity, over systemic failures ranging from acting “unconscionably” in a government bond deal to charging dead customers.
The penalties announced yesterday are a troubling milestone for Australia’s fourth-largest bank, which last week announced 3,500 job cuts as new CEO Nuno Matos looks to improve profitability at a lender that already is required to hold more capital in reserve than its peers due in part to fallout from the bond deal.
“Time and time again ANZ betrayed the trust of Australians,“ Australian Securities and Investments Commission (ASIC) chair Joe Longo said. “As far as the unconscionable conduct is concerned, it was clearly grubby.”
With yesterday’s announcement, ASIC has brought 11 civil penalty proceedings against ANZ since 2016, with total penalties exceeding A$310 million. ANZ has admitted allegations in each case, according to ASIC.
ANZ chair Paul O’Sullivan said the bank must make a significant change in the way it operates.
“In reaching this settlement we are acknowledging that we let our customers down and I apologise unreservedly,“ he told analysts and reporters.
ANZ shares closed 0.6% lower yesterday, while the benchmark S&P/ASX200 was down 0.13%.
The latest settlement, requiring Federal Court approval, resolves five separate investigations across ANZ’s Australian Markets and Retail divisions. Central to the violations was ANZ’s conduct during a A$14 billion government bond issuance on April 19, 2023.
Instead of trading gradually to limit market impact, ANZ sold significant volumes of 10-year Australian bond futures around pricing time, placing “undue downward pressure” on bond prices while assisting the Australian Office of Financial Management’s debt issuance, ASIC said.
ANZ’s trading behaviour in the 45 minutes before the bond was due to formally price pushed bond futures pricing down 2 basis points, which cost the government about A$26 million, the regulator said.
“ANZ was in a trusted position and its conduct had the potential to reduce the amount of funding available to the government,“ Longo said, noting the funds were used for services such as the nation’s health and education systems.
ANZ said it did not agree on the cost to the government but offered to repay the A$10 million it would have earned for its role on the deal.
ANZ has not participated in a government deal since this transaction more than two years ago, a statement of agreed facts lodged with the Federal Court and published by ASIC showed.
“We expect every company operating in Australia to do the right thing by its customers and follow our laws or face the consequences,“ a spokesman for Treasurer Jim Chalmers said in a statement.
O’Sullivan said the bank did not act with bad intent, but it did make serious mistakes. It had carried out 50 “accountability reviews” on employees in its markets trading business and some current and former staff had variable components of their pay impacted significantly, he said.
The violations also included widespread customer service failures. Between July 2013 and January 2024, ANZ failed to pay promised bonus interest to new account holders due to system deficiencies.
In four years to June 2023, the bank continued charging fees to thousands of dead customers, unable to identify which fees should be waived or whether charges after death had been refunded.
“Today’s announcement reinforces the fact that change is needed, and that we need to operate in a different way than in the past,“ Matos said.
“That’s critical, and that demands we do fewer things much better. We are getting again the basics right.”
ANZ said it would submit a remediation plan to the Australian Prudential Regulation Authority by the end of this month, expecting to spend A$150 million implementing reforms in the financial year ending Sept 30, 2026.
The Finance Sector Union said yesterday it would lodge a claim against ANZ for its 3,500 job cuts with Australia’s industrial tribunal. An ANZ spokesman said the bank had not been told of the union’s claim. – Reuters
