Paul O’Sullivan, release the suppressed 2018 Self-Assessment. Pronto, and hang the consequences
There is much more to the APRA sanction on ANZ on Friday than may be first apparent.
APRA announced that it has increased the capital add-on applied to ANZ to $750 million, from $500 million, “in response to heightened concerns about the bank’s non-financial risk management practices.”
This Is the second capital add-on imposed on thbe bank by APRA, with the first imposed in mid 2019. APRA sanctioned Westpac and NAB at the same time, and had earlier sanctioned Commonwealth Bank.
The 2019 sanction followed the production to APRA by ANZ of its Self-Assessment - a document rumoured to make grim reading.
In 2018 APRA directed more than 30 financial institutions to undertake Self-Assessments, an intervention inspired by APRA’s own prudential inquiry into Commonwealth Bank.
Of these 30, only NAB and Westpac have released their self-assessments into the public domain.
ANZ, shamefully, has not done so. And nor has APRA and nor have the House or Senate Economics Committees taken steps to procure release of this document.
Here’s a roundup of the rumours on what this suppressed document may contain.
It was the content of these self-assessments that informed APRA’s decision in 2019 to impose a $500 million capital add-on on all three of ANZ, NAB and Westpac.
Since then APRA has either reduced or removed the capital add-ons for NAB and Westpac.
APRA on Friday said “this capital add-on has remained in place as the bank implemented a remediation program” – a program about which ANZ has said essentially nothing over the last five years. And how, sensibly, could the bank even do so, given so few of its stakeholders have any understanding of the confronting material ANZ were under orders to redress.
“Despite this program being in place for several years, APRA has yet to observe significant improvements in ANZ’s non-financial risk management” APRA said.
“More recently, several issues emerging in the bank’s Markets business have increased APRA’s concerns. ANZ has admitted that it misreported bond trading data to the Australian Office of Financial Management in 2022/23, and that action has been taken in response to poor behaviour by employees in its Markets business.
“While ANZ has launched several investigations into these issues, they raise prudential concerns that ANZ has yet to adequately address deficiencies in controls, risk culture, governance and accountability.”
Thanks to reporting by the Australian Financial Review and others the market and the industry comprehend that ANZ is damaged goods.