ANZ chief Shayne Elliott apologises as $14bn bond scandal hits home

ANZ boss Shayne Elliott has apologised as the scandal over a $14 billion bond sale by the big four bank’s trading desk last year deepens.

The Melbourne-based bank is under scrutiny for behavioural issues in its Sydney deals room, errors reporting data on bond trades, and through an investigation by regulators into the transactions.

In an extraordinary statement to markets on Thursday, ANZ revealed several employees had been sacked, suspended or warned.

Mr Elliott said he and his top executives could face consequences from the bank’s board pending a review.

That marks a big change from earlier this week when Mr Elliott reportedly played down the regulator’s investigation.

The allegations centre on claims the bank’s traders may have manipulated the sale of Government debt last year, potentially influencing the interest rates paid by the Commonwealth on borrowings.

The bank had been appointed by the Australian Office of Financial Management — which handles close to $1 trillion of federal debt — to act as risk manager for a sale of 10-year bonds.

Those bonds are used as a benchmark for borrowing costs across the economy.

ANZ said preliminary analysis had not found evidence of market manipulation, but the trading data was to be analysed by independent experts.

The deals have sparked an investigation by the Australian Securities and Investments Commission.

ANZ admitted an “unacceptable failure” had been made when incorrect data on bond trades for the 2023 financial year had been submitted to AOFM — although the bank noted this had been fixed before final sign-off.

“I have personally apologised to the chief executive at AOFM for ANZ’s failures,” Mr Elliott said.

“We are significantly enhancing our governance process around this data, including building a separate validation tool and increasing training for relevant staff.”

It comes just one day after ASIC boss Joe Longo reportedly said ANZ was suspected of breaking the law in the 2023 deal.

Mr Elliott said on Thursday that the bank had launched an “urgent” investigation with external lawyers and an internal audit of governance and control rules.

“We have been very clear with our people,” he said.

“Where we find any evidence of wrongdoing, those involved will be held accountable and action will be taken.

“The board will also lead a process to ensure consequences will be applied to senior executives, both past and present, including myself, where appropriate.”

It’s another blow for ANZ after the company was publicly shamed by the Banking Code Compliance Committee for guzzling fees from thousands of deceased estates.

ANZ pledged to pay $3.3 million in compensation to 18,000 estates incorrectly charged fees and interest. A further 10,600 customers received apologies for delays in responding to their requests.

The pressure comes five years after a Royal Commission into financial services hit the industry hard and sparked demands for cultural change at banks.

Mr Longo told a Bloomberg event on Wednesday that banks needed to avoid complacency and show humility.

He said the sector was of vital significance for Australia’s economy but knocked back suggestions there was a broader problem re-emerging.

“I will not draw any grand inferences from one investigation into one trading activity last year (about) the banking sector as a whole,” he said.