Record fine for ANZ a bad look for the board, says MST Marquee analyst Brian Johnson
The record ASIC fine imposed on ANZ casts its former leadership in an unflattering light, and its board too, according to banking analysts.
A record $240m fine imposed on ANZ by the corporate regulator for widespread misconduct threatens to tarnish the reputation of its board and not just its executive ranks, according to one of the market’s leading banking analysts.
MST Marquee analyst Brian Johnson remarked that the board had “not done a particularly good job” in his note to clients.
On Monday, ANZ and The Australian Securities & Investments Commission revealed a peace deal culminating in an admission of unconscionable conduct in the bank’s role managing a $14bn government bond deal, as well as repeated failures in how the bank dealt with vulnerable customers.
Mr Johnson has previously noted ANZ’s lack of “banking expertise” at board level. As part of his ANZ progress checklist, Mr Johnson posed the question: “Does ANZ management manage the ANZ Board or vice versa?”
ANZ admitted it failed to respond to hundreds of hardship applications over two years. The bank also wrongly charged dead customers fees and did not respond to their families within the required time frame.
Chairman Paul O’Sullivan said the bank’s directors would not face financial consequences for the misconduct, telling The Australian on Monday that governance worked best when boards did not have “variable pay”.
“They don’t get bonuses when things go well, which is all about ensuring that they act with independence and to act in the best interests of the business,” he said.
“Moving forward to demonstrate my commitment to being aligned with the shareholders, I’m going to take my fees in the form of shares, and I’m committing to hold those until I step away from the board.”
The board was paid nearly $3m in fees over the 2024 financial year.
Mr O’Sullivan is also up for re-election at the ANZ annual meeting in December.
When questioned on the scandal by analysts, Mr O’Sullivan said ANZ’s board “takes accountability” and “that will be reflected in how we do our remuneration,” he said.
Australian Shareholders Association boss Rachel Waterhouse said it was a priority for ANZ to deliver “accountability and leadership”.
“The chair must show they can steer ANZ in the right direction, rebuild trust and address governance concerns. This failure has been costly, and shareholders expect clear accountability,” she said.
Ms Waterhouse said ANZ’s directors should be held accountable, and that could mean withheld fees, loss of committee roles, or strong scrutiny at re-election.
“After such an expensive failure, shareholders need confidence that the board has the right expertise, culture and stakeholder focus to prevent further issues and restore reputation,” she said.
University of Wollongong law lecturer Andy Schmulow said ASIC could have taken more severe action against ANZ, arguing a fine of up to $2.7bn could have been levied.
“The difference would be like the difference between a needle prick and an amputation. The difference between ‘the cost of doing business’ and ‘real deterrence’,” he said.
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