Poor behaviour: The facade of an ANZ Bank building in Sydney. ANZ’s trading operation is now looking like the problem child of the country’s banking sector. — Reuters
SYDNEY: ANZ Group Holdings Ltd’s markets division accounts for a tiny fraction of the Australian bank’s roughly 40,000 employees.
But it’s now becoming an outsized source of trouble for the 189-year-old firm and chief executive officer Shayne Elliott.
ANZ is considering a raft of policy changes to help restore the firm’s damaged reputation after three traders departed the bank amid allegations of misconduct in the Sydney dealing room.
The country’s securities regulator is also investigating the bank’s role as risk manager in a debt sale last year.
Elliott has apologised for errors in spreadsheets that misrepresented the value of fixed-income trading given to a government agency.
Interviews with more than a dozen current and former ANZ employees paint a picture of a firm that has grappled for years with allegations of poor behaviour among traders.
In one sign of how the bank has struggled to bring an end to such behaviour, people familiar with the matter said ANZ human resources personnel conducted an internal investigation of the Sydney trading operation in 2019 — questioning staffers about drinking and other issues.
“There’s quite a clear, slow drift back to old practices and old cultures in banking and finance,” said Allan Fels, former chair of the country’s competition regulator and professor at the University of Melbourne and Monash University.
“There is enough of this occurring to be an ongoing concern. We have not solved the problems of the industry.”
ANZ’s trading operation is now looking like the problem child of the country’s banking sector, and even Elliott’s job and compensation could be on the line.
An ANZ spokesperson said the firm takes “the conduct and behavioural matters identified within our Sydney dealing room seriously,” according to a statement.
The bank has “been very clear that where we find any evidence of wrongdoing, those involved will be held accountable.”
ANZ shares have lagged behind peers over the past year and on Aug 23, the country’s banking regulator told the firm it needed to hold more capital.
The Australian Prudential Regulation Authority said the recent issues in the markets division suggest the bank has yet to “adequately address deficiencies in its controls, risk culture, governance and accountability.”
The agency also told ANZ to appoint an independent party to review the root causes of the problems and come up with a plan to fix them.
The investigations have centred around ANZ’s Sydney trading room, one of the smallest of the bank’s dealing rooms in cities around the world.
ANZ’s markets group is run by Singapore-based Anshul Sidher. It is part of the bank’s institutional division, which has been overseen by group executive Mark Whelan since 2016.
Neither Sidher nor Whelan are implicated or accused of wrongdoing. Some staffers on ANZ’s main trading floor in Sydney reported to line managers in other cities or countries, which may have contributed to a lack of close oversight and accountability, according to people familiar with the unit.
Whelan, who is based in Melbourne and travels regularly to the roughly two dozen locations the bank is in, spent little time in the Sydney dealing room, the people added.
ANZ has moved Trevor Vail, its co-head of global fixed income trading, from Singapore to Sydney, and has also appointed a new chief risk officer for the markets division in the Australian financial hub, Bloomberg reported earlier.
The bank sought to identify internal culture issues in its global markets business as far back as 2013.
PricewaterhouseCoopers LLP collected information from 163 people in Australia, Singapore, Hong Kong and the UK in an independent review then, according to a copy of the report seen by Bloomberg News.
It found there was “fear of blame and concerns about raising risk-related issues” with managers and senior leaders. It also flagged weaknesses in guidance on expected behaviours, and “a lack of leadership visibility and trust.”
PwC recommended that ANZ improve its risk culture by better defining the strategy, culture, behavior and performance measures for the global markets division.
The review was done after Australian regulators began looking into whether ANZ and other lenders manipulated a key interest rate benchmark called the bank bill swap rate, which is the country’s equivalent of the London interbank offered rate.
Elsewhere in the world, like in the UK, the people whose responsibility it is to manage individual traders “would be held personally liable for turning a blind eye to what’s been going on,” said Andy Schmulow, associate professor of law at the University of Wollongong.
“That’s not possible in Australia,” he said. — Bloomberg
