ANZ has officially entered into a court enforceable undertaking (EU) with the Australian Prudential Regulation Authority (APRA). This agreement pertains to the bank's non-financial risk management practices and the overall risk culture within the institution. As part of the undertaking, ANZ will implement an additional operational risk capital overlay of $250 million.
This development emerges from ongoing discussions between ANZ and APRA, focusing on the bank's non-financial risk strategies and culture. This follows issues in ANZ's Global Markets division, which had previously prompted APRA to voice concerns in August 2024. Regarding this situation, ANZ Chairman Paul O'Sullivan stated, "We are disappointed that we have not met APRA's expectations about how the bank manages non-financial risk and its non-financial risk culture."
Despite acknowledging the progress made in non-financial risk practices, ANZ recognizes the need for improvement. "Both the Board and management will bring a clear-eyed focus to completing this work," O'Sullivan added, emphasizing the intention to address APRA's concerns outlined in the EU.
ANZ's CEO, Shayne Elliott, emphasized the bank's strong financial position but acknowledged the need for further work: "We know we have more work to do in the coming two to three years to boost our uplift of non-financial risk practices."
ANZ has agreed to appoint an independent reviewer to identify the core issues behind its non-financial risk management. Based on the findings, a Board-approved remediation plan will be developed and evaluated quarterly.
In conjunction with the enforceable undertaking, ANZ announced the adoption of all recommendations from a review conducted by Oliver Wyman. This review addressed conduct and governance within ANZ’s Global Markets business and was commissioned by ANZ's Board. Key findings noted a generally positive culture but highlighted inconsistencies in non-financial risk management activities.
Mr. O'Sullivan remarked, "The Board accepts all the recommendations of the Oliver Wyman review and will hold management accountable for implementing these in a systematic and permanent manner."
ANZ is implementing several initiatives following the Oliver Wyman report and the EU. These include appointing senior executives to enhance risk management practices. Notably, Mark Evans has been designated as Group Head, Non-Financial Risk Program Delivery, and Dan Wong as Group General Manager Operational Risk.
These initiatives build on previous efforts, including recent executive appointments in the Sydney Markets dealing room.
The Oliver Wyman review, conducted over five months, scrutinized more than 1,400 documents and involved 3,400 employee surveys and 110 staff interviews. However, it excluded matters currently under regulatory investigation.