‘What the hell is going on?’: Big bank’s year of woe summed up in one meeting

A bond-trading scandal, a culture crisis, environmental remonstration, human rights concerns related to the funding of arms maker Lockheed Martin and a mob of protesters outside.

Welcome to ANZ Bank’s annual general meeting, where there’s plenty of angst to spare both outside and inside the building. As one frustrated and confused shareholder put it: “In heaven’s name, can someone tell us what the hell is going on?”

ANZ is drowning in a sea of issues that even includes that old chestnut of allegations that it charged the accounts of dead people – a problem that everyone thought had been relegated to the annals of history after the banking royal commission seven years ago.

Paul O’Sullivan chairs the ANZ shareholder meeting.

The large shareholders with voting heft, and their proxy advisers, had already made their dissatisfaction clear to the board, giving it a fair idea of just how unpopular outgoing chief executive Shayne Elliott’s long-term bonus package was.

On Thursday morning, ANZ said Elliott’s long-term remuneration package had the support to pass muster, but only just. The resolution needed 50 per cent approval to pass – it received 50.08 per cent.

In the end, Elliott decided to forfeit the performance rights worth about $3 million. ANZ may see it as a gesture of good faith but $3 million isn’t enough to offset the damage suffered by the bank over the past six months that has left shareholders fuming.

The horror annual meeting caps off an ignominious end to Elliott’s nine years as chief executive and is a damning reflection on the board, which should arguably have never even put the bonus question before shareholders.

The reconciliatory tone on Thursday was not a picture of Elliott leaving on a high but rather a portrait of a board coerced into waving a white flag on its governance.

In a comprehensive protest against the bank, shareholders also voted down its regular remuneration report, which needed 75 per cent in favour to make it across the line. It received support from 61 per cent, representing its first shareholder “strike” at ANZ since 2018.

Chairman Paul O’Sullivan was keen to highlight the bank’s achievements, but he acknowledged that they were overshadowed by issues relating to the management of non-financial risks. Had ANZ not announced the retirement and replacement of Elliott last week, the mood of the room would have arguably been worse. It could have been populated by shareholders with pikes looking for a head.

Outgoing ANZ chief executive Shayne Elliott.Credit: Pat Scala

Sure, all banks will probably endure protests on their funding of fossil fuels and other hot-button issues, but the list of grievances from ANZ shareholders, big and small, is on another level.

They are particularly unhappy about the way ANZ has handled the No.1 issue before it – the bond-trading scandal – which is now the subject of a regulatory investigation.

Joe Longo, chairman of the Australian Securities and Investments Commission, told a parliamentary joint committee in Sydney last month that the high-profile investigation into ANZ’s role in a $14 billion government-bond sale had been expanded to include misreporting of data.

He said the investigation into the alleged market manipulation by ANZ’s bond traders is of the “highest priority” for the regulator, referring to the seriousness of the misconduct and the potential cost to taxpayers if borrowing costs had been forced higher.

In August, the Australian Prudential Regulation Authority was due to review a $500 million capital add-on it imposed on ANZ and other big lenders in 2019 during a crackdown on industry misconduct. But instead, it raised ANZ’s requirement by $250 million, citing concerns about the bank’s risk-culture management.

A series of reviews and investigations are under way by the bank, but the litany of problems has understandably got investors fired up. Even the announcement of a new chief executive – the Portuguese-born former HSBC executive Nuno Matos – has not been sufficient to quell the discontent.

Elliott made good strides in cleaning up a messy structure and focusing on core operations during his tenure at ANZ. But recent events have overshadowed these successes.

The 2024 annual general meeting is one that O’Sullivan and Elliott would probably rather forget. And the pressure will be on ANZ’s board and the new boss, Matos, to avoid a repeat next year.

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