ANZ board must apologise for $2.5bn placement fail

The ANZ board should review its understanding of its most basic obligation to shareholders after the bank was found guilty of breaching continuous disclosure rules.

The ANZ board should apologise to shareholders after being found guilting of breaching continuous disclosure rules.

The most astonishing – and depressing – feature of ANZ being held to account for deliberately failing to tell its shareholders and investors the simple but vitally important truth, is that it took eight years to get there.

Furthermore, there’s been not the slightest sign – at any stage of that eight year journey, and even more tellingly after the court judgment – of any mea culpa from the ANZ board.

Far less anything remotely like a promise not to do it again.

As for the ASX – the body supposedly with the prime oversight of listed companies – using the ANZ failure to keep the market promptly and honestly informed, as a pungent teaching lesson?

Fuhgeddaboudit.

Back in 2015, the ANZ raised $2.5bn in a placement to institutional investors. What it ‘forget’ to disclose was that the instos had only subscribed for $1.7bn; a hefty $790m had to be stumped up by the underwriters.

This was clearly absolutely vital information for an informed market in ANZ shares. It should have been immediately disclosed to the market; and most especially to ANZ’s retail shareholders who were being asked to subscribe for shares after the instos.

As it turned out, the debacle proved an ‘own goal’ by ANZ, as its shock move to raise money sent its share price plunging; retail holders actually got to buy their shares even cheaper. A rare win for them.

But they would probably have got them even cheaper still if the massive shortfall – and the implicit reality of the underwriters wanting to sell those shares into the market – had been disclosed.

Well, finally, the ANZ has been held to account. The Federal Court ruled this month that ANZ had breached its continuous disclosure obligations.

Justice Moshinsky said the shortfall was material information, and that ANZ’s position that the shortfall was “generally available” information was wrong.

Score one for ASIC; albeit to me, rather depressingly, that it took eight years to get there. Over something, that was really quite simple. And also, utterly black and white – there wasn’t even one shade of grey.

Adding – serious – insult to injury, the ANZ is up for a fine of all of $1m.

At no stage has the ANZ been prepared to admit it was wrong or apologise.

In response to the judgment, it merely “acknowledged the decision of the Federal Court”. And that it was “reviewing” it.

Might I suggest the ANZ board should take a good hard look at itself; that rather than review the judgment, it should review its own understanding of its most basic obligation to its shareholders.

This was not only black and white legally, but it should have been black and white to the ANZ board.

Even if the board functionally didn’t know the exact truth ‘on the day’, when it did find out, it should have moved immediately to admit its failure and to hold people to account.

The ASX must use this to tell companies and boards of their single most important duty. To tell the truth, the whole truth and nothing but the truth. Immediately.

Originally published as ANZ board must apologise for $2.5bn placement fail