According to a letter received by The Australian under a "Freedom of Information" request, the Australian Prudential Regulation Authority (APRA) criticized ANZ's handling of non-financial risks just one day before the regulator announced a $250 million increase to the bank's operational risk capital add-on in August.
APRA reportedly expressed "long-standing concerns" about the bank's risk management and governance, particularly in its markets business. Such issues included the misreporting of $54 billion in government bond trades to the Australian Office of Financial Management (AOFM), which APRA attributed to "poor internal systems coupled with insufficient oversight." Despite years of discussions, APRA noted ANZ had "failed to live up to expectations" and warned of further penalties.
The letter required ANZ to commission an independent review of the "root causes of the recent issues and risk governance" and develop a remediation plan. APRA cautioned, “If APRA's concerns are not promptly or effectively addressed, [redacted] additional action will be considered.”
Internal sources revealed persistent conduct and governance issues, with attempts by staff to escalate concerns often ignored. In response, ANZ recently reduced bonuses for traders but continued significant payouts to some senior staff. The bank's board, led by chair Paul O'Sullivan, has formed a subcommittee to address these challenges and ensure better oversight.
Earlier this month, ANZ announced that CEO Shayne Elliott would step down in July 2025 after nine years at the helm. Nuno Matos, who was previously CEO of Wealth and Personal Banking at HSBC, will serve as Elliott's replacement.
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