Key Insights
- ANZ faces Australia’s largest-ever regulatory fine of A$240 million for “unconscionable conduct” in government bond trading and widespread retail banking misconduct affecting nearly 65,000 customers.
- The bank allegedly cost Australian taxpayers A$26 million by manipulating bond prices during a A$14 billion government debt sale in April 2023, while serving as the trusted “duration manager” for the transaction.
SYDNEY, (MarketsXplora) – Australia and New Zealand Banking Group faces a staggering A$240 million ($160 million) penalty after admitting to what regulators described as “unconscionable conduct” in government bond trading and “widespread misconduct” that left nearly 65,000 retail customers in vulnerable positions.
The Australian Securities and Investments Commission (ASIC) announced Monday it would seek court approval for the largest-ever total penalty imposed on a single company in the regulator’s history, marking the 11th civil action against ANZ since 2016.
“Time and time again, ANZ has betrayed the trust of Australians,” ASIC Chair Joe Longo told a Sydney press conference, using unusually blunt language to describe conduct he labeled as “clearly grubby.” The penalty caps a months-long investigation that exposed systematic failures spanning both the bank’s prestigious institutional division and its retail operations.
The Melbourne-based lender, Australia’s second-biggest bank by assets, will face the Federal Court alongside ASIC in four separate proceedings covering misconduct that occurred over multiple years. Combined with a separate A$150 million remediation plan, ANZ’s total hit reaches A$390 million.
Government Bond Scandal Costs Taxpayers Millions
The most serious allegations center on ANZ’s role as “duration manager” for a A$14 billion Australian government bond sale on April 19, 2023 – a “prestigious and trusted role” that required the bank to minimize interest rate risk for the Commonwealth.
Instead, ASIC alleges ANZ sold an unusually large volume of bond futures ahead of the sale, causing a 2-basis-point fall in bond prices and potentially costing the government A$26 million in higher interest payments.
A lower price for the bond meant the government raised less funds, money that might’ve been used to support essential services, including Australia’s health and education systems, affecting all Australians, Longo said.
The conduct draws an A$85 million penalty – the largest single component of the settlement. ANZ also faces an additional A$40 million fine for overstating bond trading turnover data submitted to the Australian Office of Financial Management over nearly two years, potentially helping it win more lucrative government mandates.
“Let’s be frank. They said they were going to be frank in their communication with AOFM. They weren’t. They said they were going to follow their own policy and procedure. They didn’t,” Longo said, referring to the debt management agency.
ANZ Chairman Paul O’Sullivan acknowledged the bank had offered to refund the government money it made on the deal, while maintaining ASIC had not alleged market manipulation. “We breached some of our license obligations,” O’Sullivan told analysts Monday morning. “There are many good people working in markets [for ANZ] who feel their reputations have been tarnished.”
Retail Banking Failures Leave Thousands Stranded
The remaining A$115 million in penalties stems from systematic failures in ANZ’s retail division that ASIC Deputy Chair Sarah Court said violated the fundamental trust required in banking.
Perhaps most concerning, ANZ failed to respond to 488 customer hardship notices – some for more than two years – despite customers facing unemployment, serious health issues, bereavement and family violence. In some cases, the bank pursued debt collection activities and issued default notices while ignoring hardship applications, drawing a A$40 million penalty.
The vulnerable position that ANZ put its customers in, and the repeated failures to rectify crucial issues” were key factors in the penalty size, Longo said.
Separate systemic issues plagued the bank’s savings products. ANZ made false and misleading statements about interest rates, failing to pay promised introductory bonus rates to tens of thousands of customers over an 11-year period through January 2024. Even after compensating nearly 200,000 affected customers, another 26,900 were underpaid between August 2024 and March 2025, resulting in a A$40 million fine.
The bank also failed to refund fees charged to thousands of deceased customers and was slow responding to loved ones managing estates, earning a A$35 million penalty. ASIC attributed these failures to “inadequate systems and processes” rather than intentional misconduct.
ANZ’s new Chief Executive Nuno Matos, just four months into leading the bank through a broad overhaul including 3,500 job cuts, called the failings “simply not good enough.”
It is my expectation that we see measurable improvements across the bank to better protect and care for our customers and to create a more sustainable business, Matos said.
The penalty caps a troubling pattern for ANZ, which has now been penalized more than A$310 million by ASIC since 2016. The latest fine exceeds Westpac Banking Corp’s previous record A$113 million ASIC penalty in 2022, though falls short of Westpac’s A$1.3 billion anti-money laundering settlement with financial intelligence agency Austrac in 2020.
Bloomberg Intelligence analysts warn ANZ’s troubles may represent “the tip of a multi-billion dollar iceberg,” citing additional headwinds including potential 10% profit hits from credit normalization and declining margins by 2026.
O’Sullivan promised accountability measures, saying the board had imposed “significant reductions in remuneration for certain current and former executives” and would ensure “further accountability” in this year’s executive remuneration review.
ANZ shares fell 0.5% Monday morning, slightly underperforming the broader S&P/ASX 200 Index’s 0.4% decline.
The bank has appointed independent expert Promontory to review progress on its remediation plan submitted to the Australian Prudential Regulation Authority, as it seeks to rebuild regulatory trust and customer confidence.
Today many Australians will rightly be questioning their trust in ANZ, Longo concluded.