ANZ taps Oliver Wyman for deep dive into culture and governance within insto bank, markets unit
Oliver Wyman, which reported on CBA’s governance in 2018, will conduct a sweeping review of culture and risk governance in ANZ’s embattled institutional division.
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ANZ has tapped consulting firm Oliver Wyman to conduct a sweeping review of culture and risk governance in its embattled institutional division, which is the subject of a probe by the corporate regulator.
ANZ employees were being informed of the review on Tuesday as the bank seeks to keep regulators at bay over conduct issues and allegations it partook in irregular trading in the bond and futures market which may have elevated costs to the federal government.
The trading allegations – which are being investigated by the Australian Securities and Investments Commission – relate to a $14bn government bond issue, jointly managed by ANZ last year.
Oliver Wyman also assisted the Australian Prudential Regulation Authority’s inquiry into Commonwealth Bank’s compliance and governance failings, which was published in 2018.
“ANZ has advised staff today that we have engaged Oliver Wyman to review our strengths and areas for improvement in our markets team’s culture and risk governance,” a bank spokesman said in a statement.
“This work will support our ongoing efforts to ensure conduct meets the standards we expect of our staff, and will help us to continue to strengthen our risk governance practices. We are encouraging staff to provide their open and honest feedback and ideas … Oliver Wyman have significant experience in this area and their engagement has been supported by APRA.”
The Oliver Wyman review – which focuses on the markets division within the institutional bank- comes after behavioural issues were uncovered within ANZ’s Sydney markets dealing room.
Three ANZ employees have already departed the bank in light of the damaging revelations, while another was issued a formal warning.
The latest review is expected to take about three months and include an online survey of all employees within the institutional bank and supporting staff who have worked closely with the markets unit. Interviews and focus groups with some employees within the relevant areas will also be held to delve further into any potential governance or cultural issues.
ANZ’s shares climbed 0.9 per cent to $31.15 on Tuesday, trailing bigger gains by its major bank rivals, but beating a 0.8 per cent rise in the S&P/ASX200.
Lead portfolio manager of Wilson Asset Management’s Leaders Fund Matthew Haupt said ANZ’s board and management had several issues distracting them from the core business, which would weigh on prospects for the bank’s shares. “There are a couple of overhangs, that (regulatory and cultural review) being one of them,” he added, noting ANZ also faced potential regulatory changes in New Zealand.
On the bank appointing Oliver Wyman for its markets conduct review, Mr Haupt said: “It’s just a necessary step as they try and resolve some of this, because it’s obviously a bit of a shambles in there and been going on for a long period.
“This issue is probably going to linger for a period of time, I would have thought 12-18 months.”
ANZ traders were entangled in the rigging of the bank-bill swap rate and examples of poor behaviour about a decade ago. The bank-bill swap rate issue was settled with ASIC in 2017 for $50m.
ANZ chief executive Shayne Elliott has previously signalled the bank’s leadership will face hits to their pay and bonuses as a result of reputational damage incurred from the recent conduct issues and bond trading allegations.
Earlier this month, Mr Elliott said ANZ would make a significant number of changes to its policies and practices before the year’s end, as it delved more closely into practices within its markets unit.
“We’ve put together a big work list of (policy and process) changes,” Mr Elliott told The Australian at the time, referring to about 25 items including changing workplace accountabilities for some staff. He noted about half of that list would be complete within the next six months, with a decision around the bank’s alcohol consumption policy during work hours expected before Christmas.
ANZ has also had Herbert Smith Freehills assisting it in reviewing the alleged bond market trading activity, while Allens was overseeing an earlier probe into markets conduct.
APRA has already forced the bank to hold another $250m in capital due to governance lapses. That takes the total additional capital being held for compliance and governance failings to $750m.
ANZ’s internal assessment of the bond trading issue found no material wrongdoing in that market, but the bank identified conduct issues within its markets division and longstanding errors in how it was reporting data to the Australian Office of Financial Management.
In August, ANZ said it acknowledged APRA’s concerns and was “expediting work” already underway to address governance lapses.
The Oliver Wyman review is expected to report to ANZ’s board and APRA and staff responses will remain confidential and be managed by the consulting firm.
Originally published as ANZ taps Oliver Wyman for deep dive into culture and governance within insto bank, markets unit
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