Australia and New Zealand Banking Group (ANZ) Chairman Paul O’Sullivan addressed investors regarding the bank’s settlement with the Australian Securities and Investments Commission (ASIC). The settlement resolves five matters related to ANZ’s Australian Markets and Australia Retail businesses.
O’Sullivan opened by placing the settlement in the context of ongoing changes at ANZ. He referenced commitments made in April about strengthening non-financial risk management across the company, noting that “the issues identified in the ASIC settlement are all failures of Non Financial Risk and a further demonstration of why it is so important that we drive a step change improvement in how we manage ANZ.”
He explained that transformation efforts are underway, led by recently appointed CEO Nuno, whose experience was cited as key to delivering needed changes. Recent workforce restructuring was linked directly to these goals. O’Sullivan stated, “We need to streamline our management layers dramatically, improve our decision making and strengthen our execution – which will also assist our uplift in NFR. While change is always difficult, for the thousands people who will continue to work at ANZ, this will be a much better bank.”
The chairman emphasized that resolving outstanding regulatory issues is vital for certainty among staff, customers, and investors. He said: “We have entered into an agreement with ASIC to resolve five matters within our Australian Markets and Australia Retail businesses. This is the culmination of many months of intensive work by management and the Board.”
Addressing specifics on markets trading, O’Sullivan admitted: “We did not adequately communicate the intended manner of our trading or the progress of our hedging activity.” He also acknowledged misleading representations made to AOFM after transactions and breaches of license obligations.
He clarified what was not alleged: “ASIC has not alleged market manipulation or over-hedging by ANZ. All trading undertaken by ANZ as duration manager was to hedge the risk born by us in connection with that role.” He added that their view is that trading did not harm the Commonwealth.
On data reporting issues, he noted prior acknowledgment from ANZ regarding inaccurate monthly turnover data submissions and a false annual attestation. O’Sullivan stated: “Importantly, ASIC has agreed that the data misreporting was not intentional... it’s clear we did make serious mistakes.”
In response to these findings, accountability reviews have been conducted for current and former employees involved in these matters—over 50 such reviews have been completed—with impacts on variable remuneration for certain individuals.
Turning to retail business failings resolved with ASIC, O’Sullivan expressed regret: “It’s clear from the facts that we have let our customers down... I am deeply sorry.” He acknowledged inadequate previous attempts at remedying some issues but reiterated commitment to ongoing transformation.
To address regulatory concerns going forward, he announced an ASIC Matters Resolution Program within Australia Retail and appointment of Promontory as an independent expert for oversight.
O’Sullivan concluded: “Together with our ANZ teams, we are undertaking the biggest restructure and reform of the bank in recent times... this transformation will ensure we deliver to customers effectively, are much more competitive and that we prevent the sort of NFR failings that are subject of today’s agreement.”
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