ANZ chairman should start 2025 by committing to publicly release the full compliance review

ANZ bank’s board is again shying away from full transparency, and providing to shareholders a sanitised summary of an independent report into governance is not good enough.

ANZ’s chairman Paul O'Sullivan and his board should take the opportunity to commit to releasing the Oliver Wyman report. Picture: Arsineh Houspian

ANZ chairman Paul O’Sullivan should aim to start 2025 on a better footing, and there’s a sure way he can.

After ruling off 2024 leaving investors and regulators frazzled and frustrated by ANZ’s lax governance and tardy management of non-financial risks, O’Sullivan can choose to begin this year with a cleaner slate.

One way to do this is for the bank’s board and management to commit to make public a report into its governance, culture and compliance practices. It is being conducted and compiled by consulting firm Oliver Wyman, given that the prudential regulator required an independent party conduct a review into the “root causes of recent issues and risk governance in the markets business”.

Asked about the report at ANZ’s annual general meeting in December, O’Sullivan told shareholders he would provide the Australian Prudential Regulation Authority with the document in its entirety. Investors, though, would have to settle for a summary of the review’s key findings.

O’Sullivan conceded it was “important that people get a sense as to what we’ve learned”.

But providing a sanitised summary to shareholders goes nowhere near far enough for ANZ. The bank’s board is again shying away from full-transparency and learning from its mistakes without the cover of darkness.

Paul O’Sullivan with incoming ANZ chief executive Nuno Matos. Picture: Aaron Francis

With chief executive-elect Nuno Matos waiting in the wings to take over in July from Shayne Elliott, there couldn’t be a better time for ANZ to put all its cards on the table.

ANZ, however, has form with its approach and in 2019 again opted against being transparent with its shareholders, despite the sector being in the crosshairs of the Hayne royal commission. ANZ was the only big-four bank after the gruelling royal commission to not publicly release a self-assessment report submitted to APRA delving into governance, culture and accountability issues.

At the time, ANZ’s then chairman, David Gonski, argued that APRA requested the bank self assesses on a confidential basis to ensure the responses were “full and frank”. He then went on to summarise how ANZ was addressing its failings.

In his statement to explain the decision, Gonski said: “In relation to governance, we found fragmented infrastructures, drawn-out processes and siloed teams.

“We also found aspects of non-financial risk management lacking maturity and our complexity impeded swift action as well as increasing the reliance on informal networks.”

Former ANZ chairman David Gonski. Picture: Getty Images

While they were strong words in 2019, many of those issues – particularly in relation to how ANZ handles non-financial risks – still exist today.

That’s why APRA hit ANZ with an additional capital overlay in August which forced the bank to hold a further $250m, in addition to the $500m the regulator imposed in 2019 for governance issues.

It seems O’Sullivan still needs to heed the deep concerns that shareholders have about ANZ and how it navigates the regulatory challenges it confronts. An embarrassing strike against the bank’s pay report in December and a huge protest vote against a resolution to grant Elliott restricted and performance rights reflecting long-term bonuses to the tune of $3.2m, should have made the message clear.

ANZ did retreat from the resolution on Elliott’s bonus grant, recognising investor angst around accountability for the damage to the bank’s reputation. O’Sullivan and the board should now take the opportunity to get on the front foot and commit to releasing the Oliver Wyman report.

The next few months at ANZ will be telling. The corporate regulator continues to probe allegations of irregular trading around a 2023 $14bn government bond issuance that ANZ was heavily involved in. ANZ’s retail bank is also in the Australian Securities and Investments Commission’s sights as it investigates issues including the charging of fees to dead customers’ accounts.

Whichever way you look at it, 2025 will serve as a landmark year at ANZ.

The onus is on O’Sullivan to provide the framework and oversight to lift ANZ out of its regulatory stupor, and transparency is as good a place as any to start.

Originally published as ANZ chairman should start 2025 by committing to publicly release the full compliance review