By Scott Murdoch and Christine Chen
SYDNEY (Reuters) – ANZ Group agreed to pay A$240 million ($159.5 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 on Monday 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.”
Including Monday’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 on Monday, 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.