Australian regulator hikes ANZ’s capital requirements after bond trading misconduct By Reuters

Australia’s prudential regulator said on Friday it had increased ANZ Group’s additional capital requirement to A$750 million ($502.73 million), stepping up its regulatory oversight after the bank recently admitted to providing incorrect bond trading data.

The move by the Australian Prudential Regulation Authority (APRA), which represents an A$250 million increase on the existing addition, highlights ongoing concerns about ANZ’s risk management practices.

The Australian Financial Conduct Authority had previously imposed an additional A$500 million operational risk capital on the bank in 2019, citing similar shortcomings in its risk governance framework.

The regulatory development comes after a turbulent period for Australia’s fourth-largest lender, which recently suspended several traders from its markets division amid allegations of misconduct, stemming from reports that bank staff were suspected of providing false information in government bond trades.

“While ANZ has launched a number of investigations into these matters, these issues raise prudential concerns that ANZ has not yet adequately addressed deficiencies in controls, risk culture, governance and accountability,” the regulator said in a statement.

The Australian Banking Regulatory Authority (APRA) has commissioned ANZ to appoint an independent entity to conduct a comprehensive review of the markets business with a focus on the root causes of recent issues, including risk governance practices and potential wider implications.

ANZ will also be required to formulate a detailed remediation strategy to address the findings and recommendations of the review.

Meanwhile, the Australian Securities and Investments Commission is investigating alleged manipulation by ANZ Bank of Australia in its A$14 billion sale of 10-year Australian Treasuries in April 2023, with the bank suspected of artificially inflating the bonds’ values ​​by influencing the prices of 10-year futures contracts moments before the terms were due to expire.

ANZ did not immediately respond to a Reuters request for comment.

($1 = 1.4919 AUD)