ANZ engages law firms to probe probing alleged rate rigging and culture in markets arm

The big four bank has brought in two law firms to uncover any evidence of wrongdoing amid allegations of the manipulation of bond prices and cultural issues within its markets unit.

ANZ chief executive Shayne Elliott, right, and head of institutional banking Mark Whelan addressed allegations against the bank’s markets unit in an email to staff on Thursday. Picture: Arsineh Houspian.

ANZ says it is treating allegations about the manipulation of government bond prices and cultural issues within its markets unit with the “utmost seriousness”, bringing in two law firms to uncover any evidence of wrongdoing.

In an email to employees on Thursday, ANZ chief executive Shayne Elliott and institutional boss Mark Whelan said the bank was co-operating with regulators to get to the bottom of the allegations and would take action if required.

“While this work is complex, we want to be very clear: where we find any evidence of wrongdoing, those involved will be held accountable and action will be taken,” the staff memo said.

“We are proud of the work we do and how we work as a team, but we all play a part in protecting what we have built. That’s why it’s vital if you see anything of concern you speak to your line manager or report it via the appropriate channels.”

The prudential regulator has an open file on ANZ in relation to the bank’s alleged trading activities in government bonds and futures, while there are also broader questions about ANZ’s culture within the markets division. That follows the Australian Securities and ­Investments Commission assessing a complaint about ANZ and matters raised by the Australian Office of Financial Management (AOFM), which is responsible for managing the country’s debt portfolio and financing.

“The fundamental allegations are not new,” Mr Elliott and Mr Whelan said in the email.

“In fact, we have been working rigorously on these matters for several months and as you would expect we are treating them with the utmost seriousness.

“This includes engaging external legal counsel to assist our investigations into both the bond trading allegations as well as our workplace culture in parts of our Australian markets business.”

ANZ is understood to have hired Herbert Smith Freehills to assist it in probing the alleged bond trading activity, while Allens is conducting a deep dive into conduct within the markets division.

Regulator interest in ANZ’s alleged trading scandal comes after the AOFM raised concerns over the bank’s role in a 2023 issuance of a 10-year treasury bond, one of two major deals done in that year.

ANZ has previously told the market it understood ASIC was investigating over “suspected contraventions of a number of provisions of the ASIC Act and the Corporations Act”.

Separately, ANZ is yet to satisfy the prudential regulator that its governance and compliance efforts are sufficient enough to warrant the lifting of an additional $500m capital overlay the bank has to hold. That wasn’t helped by ANZ being sanctioned earlier this month by the Banking Code Compliance Committee.

The sanction reflected the most “serious and systemic breaches” under the committee’s remit, after ANZ failed to stop or refund fees levied to deceased estates after customers’ deaths.

National Australia Bank had its $500m capital overlay, imposed in 2019, removed in March when the Australian Prudential Regulation Authority said it was satisfied the bank had completed its remediation program and addressed governance issues.

Westpac is the only other big four bank to still have an additional capital overlay imposed by APRA. The Sydney-based bank has to hold $1bn in additional capital due to its many governance failings.

It’s also not the first time ANZ’s markets team has been embroiled in scandal. In 2014-15, a number of ANZ traders were stood down and some later dismissed, relating to ASIC’s investigation into the bank’s participation in the manipulation of the bank-bill swap rate.

ANZ settled with the regulator in 2017, reportedly for $50m.

Around that time, there were allegations ANZ’s culture had condoned drug-taking, lewd language and at times conducting meetings at strip clubs.

Mr Elliott ran ANZ’s ­insti­tutional bank for three years until 2012, then had a stint as fin­ance boss before taking the top job. Mr Whelan took the reins running the institutional bank in 2016 and before that led ANZ Australia.