(Bloomberg) -- ANZ Group Holdings Ltd. fired and suspended traders after allegations of misconduct, with pressure building on Chief Executive Officer Shayne Elliott to clean up a markets division beset by multiple probes into its dealing practices and culture.
While Australia’s fourth-largest lender disclosed few details of the disciplinary actions in a statement on Thursday, they follow investigations into behavioral conduct in the market division and two probes into the bank’s bond dealings.
The Melbourne-based bank, which has more than 40,000 employees, said it has made management changes and that senior executives including Elliott may face consequences from the board.
ANZ has moved Trevor Vail, its head of rates and credit trading, from Singapore to its Sydney trading floor as part of the overhaul, according to a person familiar with the matter. The bank has also appointed a new chief risk officer for the markets division in Sydney, the person said, asking not to be named discussing staffing details.
Actions Taken
The actions taken against staff so far all relate to cultural and conduct issues and don’t relate to bank’s alleged trading irregularities, the person said.
ANZ has hired a specialist external counsel to investigate following allegations that it overstated bond dealings in order to win mandates, according to the statement Thursday. It’s also facing an investigation into irregularities surrounding the sale of a government bond last year, as well as the inquiry into behavioral conduct in its markets division.
“My immediate priority is to ensure the investigations are completed in a timely manner, that action is taken against any individuals who have not met the required standards and that the necessary steps are taken to ensure these conduct failures do not re-occur,” Elliott said in the statement. “Importantly, we are not limiting our reviews and will address any conduct that is not in line with our expectations,” he said.
Shares of ANZ, which has a market capitalization of A$88.2 billion ($57.6 billion) have risen about 13% this year, lagging behind a sub-gauge of financial shares on the benchmark ASX 200 index. The bank’s shares closed 0.6% lower on Thursday.
ANZ has told the Australian Office of Financial Management that it submitted incorrect bond turnover data in the 2022-23 financial year and that the errors were caused by a range of issues. The bank knows this was an unacceptable failure, the statement said. Elliott said he tasked his internal audit team to review the governance and control frameworks.
“I have personally apologized to the Chief Executive at AOFM for ANZ’s failures,” Elliott said. “We are significantly enhancing our governance process around this data, including building a separate validation tool and increasing training for relevant staff. We had already strengthened our breach reporting process through system improvements,” he said.
The Australian Securities and Investment Commission, the nation’s regulator, is investigating the execution of a 2023 Treasury bond sale. ANZ’s own initial analysis hasn’t identified any evidence of market manipulation, the statement said. Still, ANZ said it doesn’t have all the information that ASIC does and this position will be reviewed in coming months.
Future Penalties?
Sanctions for traders could mark the beginning of further turmoil for the lender, said Matt Ingram, senior industry analyst at Bloomberg Intelligence. He said that could include fines of up to A$782.5 million ($514 million) for alleged misconduct in the local bond market, along with disclosure deficiencies, though that is more likely to be smaller, in line with ANZ’s A$50 million hit in 2016 and Commonwealth Bank of Australia’s A$25 million fine in 2018 for similar wrongdoing.
Elliott said the board will lead a process to ensure consequences will be applied to senior executives, both past and present, including himself, where appropriate.
Elliott “may also be a casualty,” Ingram said.
--With assistance from Catherine Ngai.
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