Yahoo Finance Trading Scandal Engulfs ANZ’s Markets Unit as CEO Starts Probe
(Bloomberg) -- ANZ Group Holdings Ltd. bosses are battling to contain the fallout from a string of scandals as the Australian banking giant grapples with one of the toughest periods in recent years.
Most Read from Bloomberg
Biden Vows to Stay in 2024 Race Even as NATO Gaffes Risk His Campaign
Tesla Delays Robotaxi Event in Blow to Musk’s Autonomy Drive
US and Germany Foiled Russian Plot to Kill CEO of Arms Manufacturer Rheinmetall
Chief Executive Officer Shayne Elliott and his key lieutenant Mark Whelan told staff Thursday that action will be taken if any evidence of wrongdoing is found after fresh allegations emerged of it inflating bond trading data. ANZ has hired external lawyers to help investigate the claims as well as to look into workplace culture in its markets unit, which falls under the Whelan-led institutional division.
“We have been working rigorously on these matters for several months and as you would expect we are treating them with the utmost seriousness,” Elliott and Whelan wrote in a memo to staff on Thursday. A spokesperson for ANZ confirmed the contents of the memo.
At issue is whether or not ANZ overstated the value of government bonds that it traded in order to win more business on future sales. The Australian Securities and Investments Commission is already investigating the bank’s execution of a 10-year Treasury sale last year and its role as a risk manager.
“Banking history has been fraught with scandals, but what’s come to light seems more like misconduct than mistake,” said Anna Milne, senior investment analyst at Wilson Asset Management.
The Melbourne-based bank on Thursday conceded that there had been an “issue in our bond trading data reporting processes.” The lender overstated the value of Australian government bonds that it traded by more than A$50 billion ($34 billion) during a one year period, the Australian Financial Review has reported.
Anshul Sidher was appointed managing director for the markets division in August last year and has continued to be based in Singapore. He has been with ANZ for more than 12 years and previously held roles at Barclays Plc and Dresdner Kleinwort. Sidher reports to Whelan, a two-decade-plus veteran of the firm who has led the bank’s institutional business since 2016.
ANZ shares ended Thursday down 1.2%. Domestic rivals Commonwealth Bank of Australia, Westpac Banking Corp. and National Australia Bank Ltd. all closed higher.
“While the earnings contribution from bond deals isn’t significant, with a CEO succession looming it could become a significant issue,” Milne said. “Investors haven’t been focused on it and it’s certainly not priced in current share price levels,” she added.
Record Profit
ANZ’s institutional division posted record profit in the last financial year, with transaction banking, corporate finance, and the markets unit all generating more than A$2 billion each in revenue.
Still, the outlook for Australian lenders is souring amid fierce competition in mortgage lending along with emerging private credit competitors in commercial loans. With benchmark interest rates sitting near their peak, analysts are predicting net income will fall for all four of the country’s major banks, according to data compiled by Bloomberg.
The matter “might deal a serious blow to ANZ’s reputation, shaking investor confidence to the core,” said Junvum Kim, a senior sales trader at Saxo Capital Markets in Singapore. There’s the potential for “hefty penalties from ASIC looming large.”
--With assistance from Sharon Klyne, Matthew Burgess and Garfield Reynolds.
Most Read from Bloomberg Businessweek
Ukraine Is Fighting Russia With Toy Drones and Duct-Taped Bombs
At SpaceX, Elon Musk’s Own Brand of Cancel Culture Is Thriving
©2024 Bloomberg L.P.
