ANZ treating trading allegations ‘with the utmost seriousness’

The board of the big four bank says it is ‘acutely focused’ on the trading scandal and conduct matters.

ANZ head of institutional banking, Mark Whelan. Picture: Arsineh Houspian.

ANZ says it is treating “with the utmost seriousness” allegations surrounding wrongdoing by its trading team, with management meeting daily amid scrutiny from regulators and question marks over the bank’s compliance and broader culture.

In an internal memo sent to staff on Wednesday, ANZ’s institutional bank boss Mark Whelan and chief risk officer Kevin Corbally said the ANZ board was “acutely focused on this matter”.

“(The board) met again yesterday to review progress. Senior management is meeting daily and will continue to provide the board with regular updates,” the note said.

“It’s important to note we are managing three related but separate issues: conduct matters, allegations around a 2023 AOFM bond transaction and our data reporting processes.

“We’ve engaged external legal counsel to assist ANZ’s investigations and have already commenced action on workplace conduct issues that have been identified.”

ANZ is understood to have this week suspended two traders involved in a $14bn government bond sale managed by the bank in April 2023 that is now under investigation by the corporate watchdog.

“Separately, we are rigorously investigating the allegations around the AOFM transaction and our data reporting, while co-operating fully with the regulators and keeping our stakeholders informed,” the note to staff said.

“While this is complex work, it’s critical we continue to investigate these matters in a considered and methodical manner.”

The internal memo addressing the trading scandal is the second in the space of a week, with chief executive Shayne Elliott on Thursday telling staff the bank was co-operating with regulators to get to the bottom of the allegations and would take action if required.

The big four bank also confirmed it had brought in two law firms to uncover any evidence of wrongdoing. The bank 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.

The scandal concerns ANZ’s bond trading activity and alleged manipulation of bond futures contracts, as well as broader cultural issues within the bank’s markets unit.

The prudential regulator has an open file on ANZ in relation to the bank’s trading in government bonds and futures, while the Australian Securities and Investments Commission is also investigating 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 Australian this week revealed the corporate regulator had begun a key phase of its investigation into alleged market manipulation by ANZ, informally interviewing staff from the bank’s institutional division over unusual trading activity in government bonds and futures.

While ASIC has started engaging with bank employees, The Australian understands the watchdog is yet to grill staff at the centre of the allegations within ANZ’s markets unit. Sources said the regulator was conducting due diligence and firming up a potential case before conducting formal interviews.

It’s not the first time ANZ’s markets team has been embroiled in scandal. The bank, alongside its big four peers, fell foul of ASIC in 2016 when the regulator accused a group of lenders of engaging in market manipulation and unconscionable conduct by rigging the bank bill swap rate.

The BBSW provided a benchmark for setting interest rates across a range of products, including personal and business loans.

ANZ eventually admitted to manipulating the BBSW to its advantage and paid a $50m penalty.