The ANZ Group Holdings Ltd (ASX: ANZ) share price is under focus after a huge fine from regulators regarding the bond trading scandal.
Huge fine for ANZ
ANZ announced to the ASX that it has entered into an ‘agreement’ with ASIC to resolve five issues within its Australian markets and Australia retail businesses that were the subject of separate regulatory investigations.
There are five separate fines, which still require Federal Court approval:
- $85 million for ANZ’s role as duration manager in the execution of 2023 of a 2023 issuance of a 10-year Treasury bonds by the Australian Office of Financial Management (AOFM)
- $40 million for submitting inaccurate monthly secondary bond turnover data to the AOFM over almost a two-year period, making a false or misleading annual attestation to the AOFM in relation to that data and failing to lodge a report with ASIC in respect of those inaccuracies
- $40 million for its failure to pay acquisition bonus interest on certain online saver accounts and displaying inaccurate rates
- $40 million for breaching its obligations in relation to its handling of customer hardship notices
- $35 million relating to breaches of its obligations concerning deceased estates
ANZ noted that as its role as duration manager, ASIC has not alleged that ANZ engaged in market manipulation or over-hedging.
The ASX bank share also said that it believes no loss was caused to the Commonwealth from its trading as duration manager. But, “given ANZ could have executed its role as duration manager with better communication, ANZ has offered to pay the AOFM the revenue it earned as duration manager as a goodwill gesture.”
Management comments
The ANZ CEO Nuno Matos said:
The failings outlined are simply not good enough and they reinforce the case for change. It is my expectation that we see measurable improvements across the bank to better protect and care for our customers and to create a more sustainable business.
Unfortunately, some of our failings occurred when our customers were at their most vulnerable. For this, we are deeply sorry, and we are making changes to better support our customers when they need us most. We have in place customer remediation programs for the issues announced today.
It’s clear we have issues within Australian retail, particularly around our management of non-financial risk (NFR). This is why we are making changes to this business to improve its focus on core priorities and to make it safer for customers.
We have fast-tracked work to significantly improve our management of non-financial risk across the ANZ Group.
Final thoughts on the ANZ share price
This is a painful lesson for the ASX bank share and I’d be disappointed as a shareholder. It would have been more profitable for the bank to just do the right thing at the start.
I wouldn’t buy or sell based on this news, but ANZ is not an appealing investment to me right now, despite its job-cutting efforts. There are plenty of ASX dividend shares that look better buys for better growth potential.
