Those failures led APRA in August to hit the bank with an additional $250 million capital add-on charge and demanded an independent review into the root causes of the governance issues. APRA’s additional $250 million capital add-on charge on Thursday brings the total impost on ANZ’s balance sheet to $1 billion.
ANZ on Thursday released the Oliver Wyman review, which found leadership shortcomings and “limitations in the supporting infrastructure” allowed misconduct in its markets unit to emerge and persist.
“There have been allegations of multiple instances of unacceptable workplace conduct in markets in recent years, relating to a small number of individuals, including bullying and alcohol and substance abuse,” the review stated.
“Those alleged incidents were serious, and in some cases sustained over time. However, we did not find evidence of widespread or systemic misconduct ... Staff believe markets leadership did not take decisive action to address the reported misconduct, allowing it to persist.”
Oliver Wyman said its high-level review into the bank’s retail division to determine whether the issues in the markets unit was more widespread, and determined the “likelihood that some of the root causes and risk governance shortcomings identified in markets may be found elsewhere within the group”.
As part of the court-enforceable undertaking, APRA has ordered ANZ to conduct a widespread review into its entire organisation and develop a comprehensive remediation plan.
The regulator said despite frequently engaging with ANZ since 2018 over the bank’s non-financial risks management practices and culture, ANZ was “yet to demonstrate consistently that it is able to proactively identify and mitigate” issues.
“APRA continues to observe … a tendency to view and address issues in an isolated manner, rather than taking a more holistic and systemic lens, and reactivity in ANZ’s culture,” the regulator noted.
The Oliver Wyman report made 19 recommendations and 53 sub-recommendations, which ANZ chair Paul O’Sullivan said the bank had accepted in full.
The bank has appointed Mark Evans, the current head of Singapore, to the newly created executive role of head of non-financial risk program delivery, and poached Dan Wong from IAG as group general manager of operational risk. Mark Whelan, the head of the institutional bank that houses the markets division, will be responsible for overseeing the implementation of the recommendations.
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“There have already been actions taken around staffing, including the departure of a small number of individuals and some key appointments to strengthen the Sydney dealing room, and these were made last year,” O’Sullivan said in an investor update.
“The board has also applied what it considers appropriate consequences in last year’s remuneration report, while leaders in the markets business have also had accountability outcomes applied by management. Having said all of that, we acknowledge there is more to do.”
MST Financial analyst Brian Johnson said chief executives and boards were responsible for setting the tone and culture of an organisation.
“The general tone of the Oliver Wyman review is ‘we’ve had a lot of stuff that has been reported up into management … staff have been reporting it a long time, but there is relative inaction’,” Johnson said. “That’s the problem.”
ANZ chief executive Shayne Elliott stepped down last year and will be replaced by Nuno Matos, who led HSBC Mexico from 2015 – three years after the bank was fined $US2 billion ($3.2 billion) over money laundering.
Elliott on Thursday said ANZ was already spending a “significant amount” – about $100 million a year – on uplifting its non-financial risks management.
“Much of this is about cultural change, and that takes time and embedding,” Elliott said. “We have the capacity within the group to redirect resources to do this [the court-enforceable undertaking] without having any material impact on the group’s cost outlook.”
ANZ shares tanked 2 per cent by midday, as the wider bourse tumbled 1.1 per cent after United States President Donald Trump’s tariffs announcement.
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