The Australian Office of Financial Management (AOFM), which oversees the government's debt issuance, has barred ANZ from leading or jointly managing any new syndicated bond sales until the bank shows credible cultural reform. This follows an investigation that ended with the bank agreeing to pay up to $240 million in penalties.
ANZ’s issues began in 2023 during a $14 billion bond sale. As duration manager, ANZ had responsibility for managing interest rate exposures - a role that later raised concerns about conflict of interest. Unusual price movements during the marketing of the bond triggered scrutiny, leading to the discovery that ANZ had also failed to accurately report its trading volumes.
The AOFM has since reduced its dealings with ANZ and has not offered the bank any significant syndication roles since April 2023. While ANZ remains approved to participate in regular government auctions, it is now effectively excluded from the more lucrative global bond deals. ANZ earned close to $10 million in revenue from its role as duration manager on the deal, along with a joint management fee of $2.8 million.
The Australian Securities and Investments Commission (ASIC) carried out a wider investigation and found that ANZ’s conduct may have created financial losses for the government. ASIC estimates the public borrowing programme missed out on around $26 million in potential gains due to increased borrowing costs. ANZ has agreed to compensate the AOFM, though the agency will wait for court approval of the settlement before accepting payment.
This situation has not only harmed ANZ’s reputation but could also affect its future in the competitive world of sovereign debt markets. With continued scrutiny of risk practices in the financial sector, more consequences may follow unless the bank can prove that genuine reforms are being made.
