Culture clash: inside ANZ’s beleaguered markets business

Senior ANZ traders personally footed the expenses of other staff, allegedly including members of its risk team, for travel and dining, according to new revelations.

Consulting firm Oliver Wyman is currently interviewing members of ANZ’s institutional banking team, in addition to a major survey of staff, scrutinising the culture of the bank’s lucrative markets business.

Senior ANZ traders personally footed the expenses of other staff, allegedly including a member of its risk team, for travel and dining, according to new revelations about the culture of the bank’s scandal-plagued markets business.

The Weekend Australian understands that a trip to Sydney for a member of the bank’s risk unit was allegedly paid for by the same markets traders they were meant to be policing, in a move that raises questions over a possible culture of conflicts of interest.

The behaviour raised with The Australian includes ANZ markets FX trading and commodities head Herr-Ling Yeoh paying for the travel and accommodation of fellow staff members of the bank, with sources claiming this included a member of the bank’s risk, surveillance and oversight functions.

Sources said Mr Yeoh, a 13-year veteran of ANZ, allegedly paid for a Singapore-based First Line of Defence Risk team member to travel to Sydney in December last year in the wake of moves to slash travel spending on staff.

The staffer, who The Australian has chosen not to name, notes on LinkedIn he is responsible for regulatory and supervisory obligations including compliance.

Sources noted Mr Yeoh also paid for a lavish dinner for more than 10 ANZ staff from different parts of the business at Sydney dining establishment Beppi’s ­Italian. The Australian is not alleging any wrongdoing by Mr Yeoh, only that colleagues were concerned about the matter.

These sources said Mr Yeoh paying for a member of the risk team’s travel may have been a conflict of interest, noting the staffer was supposed to be independent of others in the business.

“If there’s a complaint he (the risk staffer) is on it,” a source said.

An ANZ spokesman told The Australian a member of its markets team paid, at his own expense, “and in some cases reimbursed the cost of flights for members of their leadership team located in different locations so they could connect together in one place and to promote team engagement”.

The spokesman said “no member of the bank’s risk function has had travel or accommodation paid for by this staff member”.

However, when additional details of this matter, including the name of the alleged recipient of Mr Yeoh’s spending were put to ANZ, the bank and its lawyers ­declined to comment further­.

Sources also pointed to an episode where global head of fixed income Trevor Vail allowed a junior member of staff to stay at his home in Singapore for a few weeks.

Mr Vail was recently elevated by the bank in response to the strife, handed a more senior role in ANZ’s Sydney office as part of the reorganisation of the markets business in the wake of the ­scandal.

An ANZ spokesman said the Oliver Wyman probe would ‘review our strengths and areas for improvement in our markets team’s culture and risk governance’. Picture: iStock

ANZ said this travel was “approved by a senior staff member in line with our usual travel approvals process”, noting “flights and other costs were paid for by the bank, while accommodation was provided at the property of a staff member, as it was largely unoccupied at the time”.

The Australian is not alleging any wrongdoing by Mr Vail, only that colleagues were concerned about the issue.

In addition to responding to The Australian’s questions, ANZ also threatened legal action, with Giles George principal Patrick George warning the bank had not been given a “reasonable time frame” to respond.

He did not respond to additional questions, despite being given a further two days.

“Underlying the questions seems to be an unstated allegation that our clients have in some way misconducted themselves in relation to the provision of accommodation or flights for staff,” Mr George said.

“Any such allegation, if published, would be defamatory of Mr Vail and Mr Yeoh and would be capable of causing, and would be likely to cause, serious harm to their reputations.”

Mr George demanded no article “name Mr Vail or Mr Yeoh or include any other details or information which might be reasonably capable of identifying them”.

Sources have indicated ANZ markets has long had issues of poor non-financial risk management in the trading business, many of which were well known by the prudential regulator before it imposed a $250m penalty on the bank over the problems.

Consulting firm Oliver Wyman is currently interviewing members of ANZ’s institutional banking team, in addition to a major survey of staff, scrutinising the culture of the bank’s lucrative markets business and associated back-office staff.

The probe, ordered by the Australian Prudential Regulatory Authority in the wake of publicity around a trading scandal in ANZ’s markets business, comes as consultants have run the ruler over the bank. APRA has slapped ANZ with an additional $250m capital penalty, taking the bank’s good-behaviour bond to $750m, with the regulator warning the bank repeatedly failed to address non-financial risk issues in its markets business.

An ANZ spokesman said the Oliver Wyman probe would “review our strengths and areas for improvement in our markets team’s culture and risk governance”.

“It will support our ongoing efforts to ensure the conduct of our markets team meets the standards we expect of our staff, and help us to continue to strengthen our risk governance practices,” he said.

ANZ chief executive Shayne Elliott. Picture: Arsineh Houspian

An APRA spokesman said the regulator was expecting to be handed the report into ANZ’s markets business early next year.

He said the regulator would “determine next steps at that time, including the appropriateness of ANZ making the report public”.

But ANZ sources have warned the probe may miss a number of key issues in the markets business, noting the bank failed to act on a number of reports against key members of staff in the past or allowed conflicts of interest. “The risk is this ends up being a sham investigation,” one source said.

The latest investigations by Oliver Wyman come after law firm Allens was tapped by ANZ to investigate some staff after the bank learned it was being investigated by the corporate regulator. Sources said the Allens investigation was couched as an attempt to investigate internal complaints within ANZ’s markets team, but a number of staff who put in complaints weren’t interviewed.

ASIC has granted an ANZ staffer whistleblower status after he raised concerns about conduct in the markets division and inflated trading data provided by the bank to the AOFM.

ANZ has since sacked or suspended several staff as a result of the Allens investigation.

The Australian Securities & Investments Commission is probing ANZ’s risk management role on a $14bn government bond placement last year, amid allegations of market manipulation.

ANZ had won its place in the deal as it tried to hold on to its position in government and semi-government bond markets, in a system worth almost $100m a year in syndicate fees. As revealed in The Australian, ANZ established a cross-team Australian New Zealand Dollar Bond Initiative to spearhead its bond trading efforts, bringing together staff in Singapore, Australia and New Zealand.

ANZ is also being investigated over incorrect data provided to the Australian Office of Financial Management, prior to the $14bn deal. ANZ overstated its government bond turnover figures by almost $54bn, with sources indicating this was driven by insufficient risk and oversight controls within the markets team.

Sources say key members of the markets team charged with collecting and reviewing the data lacked experience while others had limited knowledge of internal bank systems that would have allowed validation of the figures.