ANZ chief Nuno Matos plots his reset as past mistakes drag the bank to a $240m ASIC settlement
ANZ’s $240m fine has some very old causes. Chief executive Nuno Matos is finding his new ANZ vision and the bank he inherited are two very different institutions.
As ANZ was preparing for the peace deal that got the corporate regulator off its back, the bank was laying the groundwork for its surrender in a meeting with the government’s bond agency.
ANZ’s absence from a role hawking federal government bonds in high-stakes auctions caused it to miss out on, by some estimates, in excess of $100m in fees a year.
The bank was in the sin bin after that same agency, the Australian Office of Financial Management, discovered a $14bn deal had gone very awry, resulting in taxpayers copping a $26m hit.
The AOFM, which will raise nearly $150bn in sovereign debt sales this year, felt stung after ANZ traders blundered into the bond market in April 2023 with some pre-emptive hedging.
In its four-sided deal with the Australian Securities and Investments Commission struck two weeks ago, ANZ did not admit its traders manipulated the market.
Chief executive Nuno Matos drew a line under those failings for a $240m penalty. It was a swift trade, but there is more work ahead.
The bank also failed to calculate interest on bank accounts properly, and missed cries for help from customers in distress.
Matos wasn’t just taming ANZ’s animal spirits, but had a resource-starved systems problem that has dogged it for a decade.
ASIC chair Joe Longo, who will end his term in May next year, said it was disappointing to see the same conduct surface at ANZ which featured so heavily at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Matos faces staff leaking openly against his leadership. But key to the turnaround will be returning ANZ to the good graces of the Albanese government.
Matos, who previously held senior positions at HSBC and Santander, believes ANZ has grown soft. Simply, it is the smallest big bank, but boasts the biggest footprint.
Two weeks ago, days before ASIC and ANZ brokered their peace deal, ANZ’s institutional bank executive, Mark Whelan, met with AOFM boss Anna Hughes. ANZ was keen to show Canberra it was serious about cleaning up its troubled markets business.
On September 10, ANZ announced its markets boss, Anshul Sidher, would retire with immediate effect. He was said to be one of its most highly paid bankers.
Two other senior figures, Rakesh Jampala and Chris Corbett, who were hands-on in the $14bn bond deal, have also departed ANZ.
Whelan’s appearance before the AOFM would not be the first time the banking executive had appeared in front of the government bond agency seeking a fair hearing. Whelan and Matos’ predecessor, Shayne Elliott, spent 13½ minutes delivering an apology to Hughes on July 18 last year.
The AOFM boss has declined repeated requests for interview.
As the institutional bank ambled from one disaster to another, the problems in the retail division, which accounted for $115m of the ASIC penalty, almost went unnoticed. These included continuing to charge the accounts of dead customers fees and failing to stop them when notified.
ASIC alleged ANZ failed to handle its hardship matters from at least 2022, while the deceased estates issue stretched back to at least July 2019. Worse still, ANZ’s failure to pay proper interest had been an issue detected at the bank since at least 2013, until at least January 2024.
ANZ insiders say some of these were well known within the bank where ageing technology was the problem.
ANZ entered the 21st century with a 1980s skeleton.
The bank’s Cobal technology stack was cutting edge in decades past, but by 2020 it was an antique.
Former directors say it was well known in the early 2000s ANZ was behind the pack in technology, and before rival Commonwealth Bank started its upgrade of core systems.
ANZ’s institutional bank was the toast of Docklands, and Elliott had run the division before he was handed the top job in 2016. The retail business was the laggard, with a small loan book and smaller customer base than its competitors.
For example, the bank had promised customers bonus interest if they hit targets and poured cash into their savings accounts. The bank’s enterprising marketing team had promised extra interest every month, calculated daily.
ANZ couldn’t deliver that because its technology only calculated interest every 30 days.
There were also three ways of opening accounts, and in some cases customers had to take the extra step of requesting bonus rates before they could secure them.
ANZ learned it had a problem in April 2015, but didn’t take steps to fix the problem until October 2022 during which time 194,487 accounts were short changed.
The answer to all of this was a bold technology bet called ANZ Plus. Originally known as ANZ X, it started as an idea in Elliott’s head.
Instead of upgrading ANZ’s ageing technology, it would create a new bank within a bank.
Google executive Maile Carnegie was hired as digital group executive.
She would work alongside ANZ retail bank boss Mark Hand; Hand would run ANZ’s legacy bank, while Carnegie would preside over the ANZ Plus.
It was clear Elliott had a favoured child.
ANZ Plus staffers were given new branded MacBooks instead of Windows workhorse computers. Many arrived at Docklands headquarters in jeans and hoodies, and eventually, insiders say the legacy bank run by Hand was stripped of resources.
Budget for the bank’s remediation teams was pulled.
ANZ, like its big-bank stablemates, had work to do after the royal commission.
Elliott optimistically put forward ANZ Plus in the hope that it would eliminate the need for clunky manual handling of customer processes.
The heavy resourcing of ANZ Plus at the expense of the larger ANZ let problems fester and loaded the bank up with costs and staff. Between 2016 and 2024, ANZ’s headcount went from 24,506 to 42,370.
That’s compared with Westpac, where staff numbers have barely shifted over the past decade and were last reported at 35,240.
One of the first moves of Matos was to start cutting positions.
ANZ’s 4500 job cuts
Teams had been duplicated and the $4.9bn acquisition of Suncorp Bank in July 2024 added almost 3000 staff to the pile.
The Covid-19 lockdowns turned what was a slow machine into grinding gears. It smashed ANZ’s operations in Melbourne as well as the bank’s Indian services hub, Bengaluru.
Customers raged at unconditional approval timelines for mortgages spiralling out from 21 days to beyond 51 days. Other banks offered a two or three-day turnaround. ANZ’s three loan origination platforms meant it already had a reputation for acting slowly.
But the red hot Covid-19 property market powered by ultra-low interest rates supercharged the bank’s market share decline.
Shareholders lined up to take shots at chairman Paul O’Sullivan in December 2021 over the bank’s ceding of share.
Sources said ANZ had been attempting to build a faster mortgage capability in the retail bank under Hand, but this was pulled to allocate more funding into ANZ Plus.
By March 2022, Hand quit after he and Elliott could not see eye to eye over Elliott’s ANZ Plus push.
Seven senior bankers originally sat on a steering committee for ANZ Plus.
Later this was cut down to just three: Elliott, Hand and Carnegie.
Sources said Hand, along with other executives, was opposed to Elliott’s $4.9bn acquisition of Suncorp Bank, concerned ANZ was loading itself up with too many projects and problems.
Elliott hoped to take ANZ’s legacy retail bank and Suncorp Bank, and combine them under ANZ Plus.
But to this day, ANZ Plus is unable to write a new home loan, and only recently introduced a refinancing capability.
Instead of acting as an “upgrade” to ANZ, customers moved over to ANZ Plus are effectively joining a new lender, with new account numbers and bank details.
Instead of one bank, ANZ has three.
The promise of Suncorp Bank was the opportunity it presented ANZ to spread the cost of ANZ Plus over more savings and loans customers.
But by December 2024, it was increasingly clear that Suncorp Bank’s integration was facing problems.
In a long presentation by ANZ’s open banking lead, Richard Hough, and head of risk delivery Hung Dang, the problems were writ large: Suncorp Bank was well behind ANZ’s timeline.
Almost 30 staff were dedicated to Suncorp Bank’s effort to improve its risk and technology issues, alongside ANZ staffers in the bank’s non-financial risk teams.
The Hough and Dang review highlighted that many of the staff were “unfamiliar with the program, Suncorp and each other”.
Suncorp Bank sources said the connection to ANZ was tenuous, and the lender continued to operate its own systems. Staff are still required to dial into a cumbersome system connecting them to ANZ’s platform.
ANZ has committed to no net staff losses at Suncorp Bank, but many of the lender’s executives are already making the leap.
These include Suncorp Bank boss Bruce Rush, handed control of ANZ’s retail division after the sudden retirement of Carnegie weeks after Matos took on the CEO role.
Sources say ANZ now plans to phase out Suncorp Bank products by early next year, leaving customers to join ANZ or ANZ Plus. ANZ denies this.
But the same sources said part of these plans included allowing Suncorp Bank’s credit licence to roll off.
This forms part of Matos’ duplication and simplification push, which extends to a scaled-back version of ANZ Plus. Matos has been silent about his plans, but all signs point to key elements of Elliott’s legacy being dismantled.
Elliott, who had $1.1m of his short-term bonus slashed last November, may even have his remaining entitlements lopped by ANZ’s board, which has referred to possible consequences for him and others at the bank who presided over the historical misconduct.
“We will also ensure that there is further accountability for the markets and Australia retail matters as part of this year’s executive remuneration review process,” O’Sullivan said in a September 15 statement.
Matos will deliver a widely anticipated update on ANZ’s plans on October 9.
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