By Byron Kaye
SYDNEY (Reuters) -ANZ, Australia's third-largest retail bank, has found no evidence that suspected misconduct by its employees during a 2023 government bond issuance had cost Australian taxpayers, its CEO told a parliamentary inquiry on Friday.
The company is being investigated by the Australian corporate regulator after media reports this year said the bank's bond trading department was suspected of overstating its role in the debt raising.
Already the prudential regulator has told the bank to increase the amount of cash it keeps on hand by 50% due to concerns about its risk management.
"There has been speculation that potential misconduct by ANZ in connection with this issuance may have cost taxpayers," CEO Shayne Elliott said in prepared remarks to a parliamentary hearing.
"From what I have seen, there is no evidence of this."
The Australian Securities and Investments Commission (ASIC) did not respond immediately to a request for comment.
Separate to the ASIC probe, ANZ has said it is investigating potential wrongdoing by its staff in the government bond issuance, as well as misreporting of bond trading data and behaviour-related misconduct in its bond trading unit.
Asked about the unit in parliament, Elliott said the A$90 billion ($61 billion) company had suffered "significant reputational damage" but had "not seen, and I've not seen, any evidence that supports any misconduct, market manipulation otherwise, from ANZ".
Asked about media reports that said ANZ might have overstated the volume of bond trades it participated in, Elliott said the bank's initial inquiries found employees had entered some trading data in the wrong category but "it was mistake, we see no evidence that it was deliberate".
As a result of that mistake, the Melbourne-headquartered company had both overreported and underreported trading volumes, he added.
Elliott said the bank had fired one bond trader, reached agreements for another two to leave and given a formal warning to a fourth after complaints about "profanity in the dealing room and coming back during work hours having consumed an unreasonable amount of alcohol (which) seemed in violation of our code of conduct".
The scandal would also likely impact Elliott's annual pay package, the CEO said, noting the bank's board was due to begin deciding his bonuses next week.
"I get paid on those issues and get evaluated once a year," he said.
"As it happens, that process has just started. I imagine that there absolutely will be consequences."
($1 = 1.4702 Australian dollars)