CEO Morning Brief

ANZ Faces Regulator Probe on Australian Government Bond Sale

Publish date: Tue, 14 May 2024, 12:35 PM
TheEdge CEO Morning Brief

(May 13): ANZ Group Holdings Ltd said Australia’s markets regulator is investigating the firm’s execution of a government bond sale last year.

The bank said the inquiries by the Australian Securities and Investments Commission relate to the issuance of 10-year Treasury bonds by the Australian Office of Financial Management (AOFM), according to a statement from ANZ on Monday.

“ANZ takes compliance with its regulatory obligations seriously and is co-operating fully with ASIC,” the bank said in the statement. A spokesperson for ASIC declined to comment.

ANZ was appointed by the AOFM to act as a risk manager in relation to the issuance of the debt, according to the statement.

ANZ’s stock, which traded without the right to receive the bank’s next dividend, fell about 0.4% as of 11:58 a.m. in Sydney, after stripping out the impact of the payout in Monday trading.

The Australian Financial Review earlier reported that ANZ is being investigated over concerns traders manipulated the sale of government debt.

Typically, a sovereign bond offering is run by a syndicate of banks, each of whom handle a portion of the sale to investors on behalf of the government. ANZ has been the third most-used adviser of debt issuance in Australia this year, according to Bloomberg league table data, just behind Westpac Banking Corp. and UBS Group AG. That includes state-level debt as well.

Since 2011, the Australian government sold A$266 billion (US$175 billion) of new bonds via 26 bank-arranged deals, according to data compiled by Bloomberg. ANZ took part in 14 of those, accounting for about A$151 billion.

Deal data

Treasury deal data from the AOFM show just one case in which the bank acted as a joint lead manager last year — an April offer of A$14 billion in debt that lined up more than A$61 billion in bids for its 3.5% yield. That helped make it one of the more sought-after Treasury offerings of the year on a subscription basis. Ultimately, it was priced by the banks including ANZ, Commonwealth Bank of Australia, Deutsche Bank AG, and National Australia Bank Ltd at 9.5 basis points above the benchmark money rate.

Some Australian lenders, including ANZ, were in the past accused of seeking to rig the benchmark bank bill swap rate. That resulted in tens of millions of dollars of fines, following the settlement of cases brought by ASIC.

Source: TheEdge - 14 May 2024

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