Australia fines ANZ $165M for mishandling government bond deal, other misconduct

Dec 19 (Reuters) – A Federal court has imposed a A$250 million ($165.25 million) penalty on lender ANZ Group for mishandling a A$14 billion government bond deal and other systemic failures that harmed taxpayers and retail customers, Australia’s corporate watchdog said on Friday.

The Australian Securities and Investments Commission (ASIC) said the penalty was imposed across four separate cases involving misconduct in its institutional and retail banking units.

Since 2016, the ASIC has brought 11 civil penalty proceedings against the country’s no.4 bank, which was found to have a culture that made its staff reluctant to speak up and red tape hampering some of its processes, according to a review into the bank.

ANZ’s shares were marginally higher at A$36.08 at 0454 GMT, compared with a 0.4% gain in the ASX200 benchmark index.

The lender has been fined A$135 million for institutional and markets breaches tied to the government bond deal and inaccurate secondary bond market turnover reporting. This also includes a record A$80 million for unconscionable conduct.

It must also pay A$40 million for not responding to hundreds of customer hardship notices, A$40 million for misleading savings-rate statements and underpaying interest to tens of thousands of customers, and A$35 million for not refunding fees charged to thousands of deceased customers.

“Time and time again ANZ betrayed the trust of Australians,” ASIC Chair Joe Longo said in a statement on the watchdog’s website.

“There are fundamental issues with ANZ’s risk and compliance culture that require the board’s and executives’ urgent attention.”

The combined penalty is the largest ASIC has ever announced against a single entity, Longo said, reflecting the seriousness and scale of the breaches.

Justice Jonathan Beach increased the penalty by A$10 million to A$50 million for inaccurate reporting of secondary bond market turnover data, the watchdog said, stating the court found ANZ’s conduct “inexcusable”.

In September, the ASIC and ANZ had asked the court to impose penalties of A$240 million in relation to the four cases.

“The financial impact of the revised civil penalties and ASIC’s costs are almost wholly covered by existing provisions, including a A$240 million penalty provision,” ANZ said in a separate statement.

($1 = 1.5131 Australian dollars)

(Reporting by Roshan Thomas in Bengaluru; Editing by Sherry Jacob-Phillips and Janane Venkatraman)