ANZ faces record AUD240 million penalty for widespread misconduct

ANZ Group Holdings Ltd on Sunday said it has agreed to pay penalties totalling AUD240 million, approximately USD159.6 million, after admitting widespread misconduct in several investigations.

The Melbourne, Australia-based bank has entered into an agreement with the Australian Securities & Investments Commission to resolve matters relating to its Australian Markets and Australia Retail businesses that were subject to separate investigations by the regulator.

ASIC Chair Joe Longo said: "The total penalties across these matters are the largest announced by ASIC against one entity and reflect the seriousness and number of breaches of law, the vulnerable position that ANZ put its customers in and the repeated failures to rectify crucial issues."

"The issues we have seen reflect serious inadequacies across multiple levels and multiple divisions of ANZ and a clear failure to manage non-financial risk," ASIC Deputy Chair Sarah Court added.

The penalties remain subject to consideration and approval by Australia's Federal Court.

If approved, ANZ will be fined AUD85 million for its role in a AUD14 billion treasury bond issuance that took place in April 2023.

"Instead of trading gradually throughout the day to limit market impact, ANZ sold a significant volume of 10 year Australian bond futures around the time of pricing which placed undue downward price pressure on the bond price.

"ANZ knew its trading could expose its client to significant risk of harm, but did not disclose to its client that ANZ still had significant volumes to sell before pricing nor provide its client an opportunity to consult with ANZ about delaying pricing. This denied the government an opportunity to protect itself and the public interest," ASIC explained.

ANZ commented: "In relation to ANZ's role as duration manager, ASIC has not alleged ANZ engaged in market manipulation or over-hedging. All trading undertaken by ANZ as duration manager was to hedge the risk borne by it in connection with that role on this transaction.

"It is ANZ's view that no loss was caused to the Commonwealth from its trading as duration manager. However, given ANZ could have executed its role as duration manager with better communication, ANZ has offered to pay the [Australian Office of Financial Management] the revenue it earned as duration manager as a goodwill gesture."

ANZ could also pay a AUD40 million penalty for incorrectly reporting its bond trading data to the Australian government by overstating the volumes by tens of billions of dollars over a period of almost two years.

One AUD40 million fine is the result of the bank's failure to pay introductory bonus interest on some Online Saver accounts and displaying inaccurate rates between July 2013 and January 2024, while another AUD40 million fine relates to a breach of obligation when handling the hardship notices of 488 customers between May 2022 and September 2024.

The agreement further stipulates a AUD35 million penalty to refund fees charged to thousands of dead customers from July 2019 to June 2023, and for not responding to loved ones dealing with the estates of the deceased within a required time frame.

Chief Executive Officer Nuno Matos commented: "The failings outlined are simply not good enough and they reinforce the case for change. It is my expectation that we see measurable improvements across the bank to better protect and care for our customers and to create a more sustainable business."