Corporate watchdog investigates ANZ over government bond sale
By Millie Muroi
The corporate watchdog is investigating ANZ Bank over its role as a risk manager in the issuance of $14 billion in Australian government bonds last year, amid suspected breaches of the law.
On Monday, the Australian Financial Review first reported that ANZ was being investigated by the corporate regulator over concerns its traders manipulated the sale of government debt last year.
The AOFM said it had made no specific complaint to ASIC about ANZ.Credit: Oscar Colman
In a post on its website, ANZ acknowledged the Australian Securities and Investments Commission (ASIC) was investigating the bank’s execution of a 2023 issuance of 10-year Treasury bonds by the Australian Office of Financial Management (AOFM).
“ANZ understands that ASIC is investigating suspected contraventions of a number of provisions of the ASIC Act and the Corporations Act,” the bank said. “ANZ takes compliance with its regulatory obligations seriously and is co-operating fully with ASIC.”
Shares in ANZ fell 0.2 per cent to $28.21.
The AOFM issues debt securities on behalf of the Australian government, managing its cash and debt portfolios, and providing advice on a range of financial risks. Last year, it issued $78.8 billion in Treasury bonds. ANZ’s role included hedging against risks such as interest rate changes.
A spokesperson for the AOFM said the Treasury bond transaction in question involving ANZ was for the issue of the December 2034 Treasury bond which, when priced on April 19, 2023, was worth $14 billion at face value.
“ANZ was one of four banks appointed as joint lead managers for this transaction,” they said, noting that it was routine for the AOFM to debrief ASIC on all of its syndicated bond issues. “The AOFM has made no specific complaint to ASIC about ANZ.”
ASIC declined to comment.
Usually, a government bond offering is executed by a group of banks, each of which manages a part of the process of selling the bonds to investors on behalf of the government. According to Bloomberg, ANZ has been the third-most used adviser of debt issuance in Australia, including state-level debt, this year.
ASIC’s investigation comes less than a decade after some lenders, including ANZ, were accused of rigging the bank bill swap rate – a benchmark interest rate. ANZ reached a settlement with ASIC, paying fines and admitting to attempted unconscionable conduct by some of its traders. In 2017, ANZ said it had changed the way it ran the markets business since 2015, including through more training of traders and new policies and systems.
Ahead of the federal budget to be delivered on Tuesday, global financial services group Nomura said it expected Australian government debt issuance to increase to between $80 billion and $95 billion in the 2024 to 2025 period, largely reflecting the maturity of the bonds.
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