ANZ boss pledges action over inflated bonds allegations

ANZ chief executive Shayne Elliott has said he is treating concerns about the bank’s potential trading and cultural issues in its markets business with “utmost seriousness” after allegations it overstated the value of government bonds it traded by more than $50 billion.

In an internal note on Thursday, Elliott said it was disappointing the concerns, first revealed in The Australian Financial Review, were reported in the media, but that the fundamental allegations were not new.

ANZ chief executive Shayne Elliott said the bank had engaged external legal counsel.Credit: Arsineh Houspian

“In fact, we have been working rigorously on these matters for several months, and as you would expect, we are treating them with the utmost seriousness,” he said.

“This includes engaging external legal counsel to assist our investigations into both the bond trading allegations as well as our workplace culture in parts of our Australian markets business.”

On Thursday, The Australian Financial Review reported ANZ’s markets division had overstated the value of government bonds it traded over the past 12 months by more than $50 billion, boosting its likelihood of winning lucrative mandates to issue Commonwealth debt.

The bank reportedly admitted to the Australian Office of Financial Management, the manager of government debts, that numbers it had provided about the volume of turnover were wrong.

The bank facilitated $83.2 billion in government bond trades for clients in the year ended June 2023, but reportedly first told the AOFM it had facilitated $137.6 billion. Those numbers are a key factor considered by the AOFM in its issuances, with the largest traders usually selected.

Elliott reiterated the bank was fully co-operating with regulators and that it would get to the bottom of the issues.

“While this work is complex, we want to be very clear: where we find any evidence of wrongdoing, those involved will be held accountable and action will be taken,” he said.

ANZ’s share price fell 1.2 per cent to $29.34 a share following the news on Thursday.

The allegations come after it was revealed the corporate watchdog was investigating ANZ over its role as a risk manager in the issuance of $14 billion in Australian government bonds last year amid suspected breaches of the law. ANZ’s role in that issuance included hedging against risks such as interest rate changes.

Less than a decade ago, some lenders, including ANZ, were accused of rigging the bank bill swap rate – a benchmark interest rate – with ANZ reaching a settlement with ASIC to pay fines and admitting attempted unconscionable conduct by some of its traders.

In 2017, ANZ said it had changed the way it ran the markets business since 2015, including through more training of traders and new policies and systems.

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