ANZ Bank’s risk culture is under fire by investigators and regulators

(Bloomberg) – Independent review shows that leadership shortcomings and problematic cultures do not always maintain bad behavior, highlighting bad behavior in the root causes of risk management deficits at ANZ Group Holdings Ltd.

Oliver Wyman’s five-month survey centers on the Australian Bank’s market sector, where it found a culture is not always strong enough to force employees to behave in line with expectations. ANZ’s board of directors will ask Mark Whelan, the company’s head of institutional banking, to oversee the review’s 19 recommendations and 53 recommendations.

The assessment also shows that risk culture issues may not be limited to the market sector, and banks are advised to conduct further investigations to check whether similar issues exist in other areas of the company.

Read the entire Oliver Wyman report here.

With new CEO Nuno Matos at the helm next month, the stern report highlights the challenges of former head of wealth at HSBC Holdings Plc Plc Wealth. Bank regulators (Australia’s regulator) increased their capital surcharges to $1 billion ($628 million) earlier on Thursday, a finding of an investigation reported by Oliver Wyman, saying long-standing risk management flaws remain.

ANZ said it will soon appoint an independent reviewer to identify the root causes and behavioral drivers of the company’s shortcomings in its non-financial risk management practices and risk culture.

Outgoing CEO Shayne Elliott tagged Apra’s new restrictions on banks as “at the end of a tougher reaction,” even if he acknowledged that banks should do it earlier.

Elliott told Bloomberg in an interview in Melbourne that the fines from Prudential regulators against banks “feel like the new standard”.

“I should have done more at the beginning, but from a banking perspective, APRA “raised their expectations. We can argue that this is right, wrong or unfair, but anyway, they have changed their goals. ” he said.

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The report notes that in recent years, multiple instances have been conducted in ANZ’s market operations, related to a few individuals, including bullying, alcohol and substance abuse, and says there is no evidence of broad or systemic misconduct.

It also marks restrictions on supporting infrastructure that allows misconduct to occur and persist. This ultimately led to the loss of trust of employees, the report said. The independent review took place between October 2024 and March 2025 and included interviews with more than 110 employees.

The report said a large number of employees in the trade and trade agreement divisions in Sydney and London spanned various roles and qualifications, raising concerns about the observed inappropriate workplace behavior. The report said staff believe the leaders did not take decisive action to address the reported misconduct, thus keeping them relentless.

Key recommendations include clarification and strengthening leadership standards in the market sector, as well as a higher level of front-end oversight. This will ensure that expectations for supervisors are clearly articulated, strengthened and monitored, the report said. It said other suggestions focus on sharing lessons learned and improving the reporting capabilities of banks.

The bank appointed Mark Evans as head of non-financial risk program delivery to report directly to the CEO. ANZ also added Dan Wong, the new general manager in charge of operational risks, who will report to Chief Risk Officer Kevin Corbally.

Chairman John Lonsdale said Thursday that APRA “has long been focusing on ANZ’s non-financial risk management practices and risk culture.” “These include weaknesses in ANZ’s operating risk and compliance management and the reactive risk culture.”

Matos takes over Elliott next month. Elliott suffered millions of dollars in damages, partly due to the misfortune of the bank’s market division, which also faces regulatory investigations into bond transactions.

“We are disappointed with the expectations of how banks manage non-financial risks and their culture of non-financial risks,” ANZ Chairman Paul O’Sullivan said in another statement. “Now, we have a “clear roadmap to solve the problem.”

The regulator said it also accepted an enforceable commitment from ANZ to address “persistent weaknesses in bank non-financial risk management practices and risk cultures.”

“Both the board and management will be sensitive to the work in search of eliminating the capital cover as soon as possible,” O’Sullivan said.

What does Bloomberg Intelligence say

Australia’s banking regulators raised lenders’ capital add-ons to $1 billion, cutting a total of 10-15 basis points, down 10-15 basis points from the return on equity. We believe ANZ’s profit will miss the 7 basis points of this year’s profit margin in fiscal 2025. Banks also face credit headwinds as bankruptcy surges and mortgage credit weakens

– Matt Ingram, Senior Industry Analyst. Read the report here.

(Comments on the interview with ANZ CEO in paragraph 6)

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