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ANZ, one of Australia’s largest banks, said on Thursday it had fired, suspended or formally warned several employees and overhauled management of its markets division in response to alleged bond trading irregularities.
The bank has been under scrutiny in recent months over allegations that it manipulated the sale of government bonds. The practice allegedly cost the government more to raise debt and triggered investigations into ANZ’s behaviour amid accusations that the bank may have broken the law.
ANZ said in a statement that “several” employees in its markets division had been fired, suspended or issued a formal warning. It added that an external counsel would continue to investigate allegations of “inappropriate conduct and behaviour” on its Sydney-based trading floor and that management of the floor had also been overhauled.
The bank said a preliminary analysis of the bond sale had not identified any evidence of market manipulation, but it said it would review its position in the coming months based on an ongoing investigation by the Australian Securities & Investments Commission.
The statement followed comments this week from the head of the ASIC, which indicated it was carrying out an in-depth investigation into the bond sale and not an early-stage routine inquiry as ANZ had previously suggested.
The tone of ANZ’s statement from chief executive Shayne Elliott reflected a more serious response to the allegations. “Where we find any evidence of wrongdoing, those involved will be held accountable and action will be taken. The board will also lead a process to ensure consequences will be applied to senior executives, both past and present, including myself, where appropriate,” he said.
ANZ also admitted it told the Australian Office of Financial Management, which manages government debt, that it had given the office incorrect information related to bond sales in August last year. It attributed that error to including transactions that should have been omitted and some double-counting of other transactions.
Describing it as “an unacceptable failure”, Elliott said the data had been reviewed and the bank was talking to ASIC about whether it should have reported the issue to the watchdog.
Jefferies analyst Matthew Wilson said there were material adverse outcomes related to the issues identified by ANZ, which has worked hard under Elliott to restructure its operations.
He argued that the revenue generated by its markets division was relatively small — less than 1 per cent of ANZ’s overall revenue — but that such business lines needed to have stronger controls as they “are more naturally vulnerable to transgressions and impropriety”.
“It’s a regrettable setback to ANZ’s efforts to decisively bury the accident-prone ghosts of the past,” he said.