ANZ Group Holdings Ltd (ASX: ANZ) shares are under the spotlight today after the bank was punished by the regulator APRA.
Enforceable undertaking
ANZ announced it has entered into a court enforceable undertaking (EU) with the Australian Prudential Regulation Authority (APRA) for non-financial risk management practices and risk culture across the group.
APRA has imposed an additional operational risk capital overlay of an additional $250 million, following previous overlays.
ANZ also said it has accepted all recommendations of an independent culture and risk governance review into its global markets business, which was commissioned by the ANZ board of directors.
That review found there was “no evidence of widespread or systematic misconduct within Markets and that behavioural issues that led to the review were isolated incidents.”
It also said that the way staff within its markets division experience the culture is “variable” and the culture was “not always strong enough to constrain inappropriate behavior”.
The report also noted that risk management was inconsistently executed and there were markets leadership shortcomings.
ANZ said it was taking a number of actions, including the appointment of senior executives to strengthen the non-financial risk management practices and risk culture across the group.
Management commentary
The ANZ Chair Paul O’Sullivan said:
We are disappointed that we have not met APRA’s expectations about how the bank manages non-financial risk and its non-financial risk culture. A strong non-financial risk regime is critical to protecting our bank and our customers.
The EU entered into today provides us with a clear roadmap for addressing APRA’s concerns. Both the board and management will bring a clear-eyed focus to complete this work, seeking to have the capital overlay removed as quickly as possible.
The board accepts all the recommendations of the Oliver Wyman review and will hold management accountable for implementing these in a systematic and permanent manner. This will be integrated with the work we are doing across the group to comply with the EU agreed with APRA.
Final thoughts on ANZ shares
ANZ has been punished by the regulator and this is a negative for the bank until it comes off.
It may be the cheapest of the big four banks, but it’s not exactly growing at a good rate, so it’s not going to enter my portfolio any time soon.
For me, there are other, more exciting ASX dividend shares to consider.
