ASIC going through ANZ bond data as it follows trading scandal trail

Documents released under a freedom of information application show ASIC in August sought ANZ reports into secondary market transactions in government bonds, for which it is under scrutiny.

ANZ chief executive Shayne Elliott and ASIC chair Joe Longo.

Almost a year after closing a $14bn bond placement, the Australian Office of Financial Management has lifted the lid on what the corporate regulator was hunting in its latest pursuit of banking giant ANZ.

Documents released under Freedom of Information reveal the corporate regulator called on the AOFM in August this year to hand over documents tied to an ill-fated $14bn bond deal which hit markets in April 2023.

Investigators from the Australian Securities & Investments Commission, which is examining ANZ’s role in allegedly manipulating the bond market ahead of the $14bn government bond placement, were seeking the AOFM’s correspondence with the ANZ’s traders as well as “emails, revised reports and perhaps conference calls/meetings where notes may have been taken or the meeting recorded”.

This came as ASIC sought to unravel “the revision to ANZ’s trading turnover in about August 2023”. The bank allegedly misreported its bond trading figures after telling the AOFM it traded $137.6bn for clients in the year ended June 2023.

ANZ overstated its turnover by more than $50bn. The insight into ASIC’s investigations reveal the regulator is looking closely at ANZ’s reports to the AOFM around secondary market transactions in government bonds. There are allegations the bank pumped up its volumes in a bid to win a bigger slice of the bond deal.

ANZ was appointed joint lead manager on the $14bn deal alongside Commonwealth Bank, Deutsche Bank and National Australia Bank. A separate document shows ASIC asked AOFM staff whether ANZ was iven any further roles as a joint lead manager on government bond deals after April 2023.

“You are correct mate,” an AOFM staffer told ASIC.

The documents, released under FOI, reveal ASIC wanted government bond trade data compiled by the AOFM concerning ANZ in August 2023 as well as the 11 previous months.

However, a further heavily redacted exchange reveals ASIC questioned the data provided by the AOFM, querying a “50 per cent weighting you referred, or the panel position for ANZ” in an email titled “data confirmation”.

“Have I misunderstood?,” an ASIC staffer asks the AOFM ­representative.

Another email was sent, detailing ANZ’s “original” turnover data.

This showed the AOFM contacted ANZ on August 2 last year in an attempt to “ensure its ­accuracy”.

“Attached is a spreadsheet containing the aggregated data from your responses.

“Please review the attachment and confirm its accuracy by reply email,” an AOFM staffer from its funding, strategy and research team said.

ANZ CEO Shayne Elliott in Singapore.

The documents show this exchange was also sent to ASIC on June 20 this year.

ANZ has previously said it corrected its incorrect data “before the required year-end sign-off: required”.

The bank told investors the errors “were caused by a range of issues including process and data extraction errors”, noting it was “an unacceptable failure” and revealing ANZ considered whether it should have reported the incorrect information to ASIC “earlier than it did”.

A response from AOFM chief executive Anna Hughes to The Australian’s FOI applications reveals the agency has nine documents detailing “internal com­munications” concerning ANZ’s role in the $14bn placement.

This is in addition to a further 16 documents detailing correspondence between the AOFM and ASIC over ANZ, sent between May and July this year, as the regulator intensified its investigations into the bond trading ­scandal.

Ms Hughes told The Australian one document detailing internal communications revealed “the conduct of an ongoing investigation of a breach of the law” by ASIC, warning its disclosure “could reasonably be expected to have an adverse effect on the proper conduct of this and any future investigations”.

The AOFM boss also warns two documents captured in the search would reveal confidential information handed over by ANZ “relating to the AOFM’s secondary market turnover survey”. “If this material were to be disclosed, it could reasonably be expected to impact the willingness of financial institutions that participate as registered bidders to engage with the AOFM on the methodology, quality, and assurance of the AOFM’s secondary market turnover survey,” Ms Hughes said.

She also noted three documents exchanged with ASIC between May and June contain sensitive information related to the live investigation into ANZ.  The Australian has previously revealed ASIC’s manoeuvres to gather information surrounding ANZ’s role in the questionable $14bn bond placement, canvassing legal breaches in July last year soon after the AOFM gathered the sensitive turnover data from the bank.

ASIC has interviewed a number of ANZ staff as it investigates the bank’s trading scandal, with chair Joe Longo warning the probe was “very complex”.

Analysts have warned ANZ could face a significant financial penalty, topping $780m, if found to have manipulated the government bond market.

The Australian Prudential Regulation Authority has also weighed into the scandal, slapping ANZ with a $250m capital penalty in August over “non-financial” risks.