Reserve Bank seeks ANZ improvements
The Reserve Bank says there are improvements required to ANZ’s processes for its directors, after a review prompted by concerns including the sale of former chief executive David Hisco’s house to his wife.
In June the Reserve Bank requested a report on ANZ’s director attestation and assurance framework.
The Reserve Bank asked for the report following concerns about ANZ’s directors attesting to compliance despite ANZ’s failure to use an approved operational risk capital model as required by the Reserve Bank, since 2014, inaccurate attestations about expenditure by Hisco and the sale of a St Heliers property to his wife.
Hisco resigned amid concerns he had mischaracterised expenses, including tens of thousands of chauffeured car rides and wine storage.
In June, Stuff revealed the bank paid $7.55 million for the St Heliers house in early 2011, for Hisco and his family to live in.
It was then sold to Hisco’s wife, Deborah Walsh, for $6.9m in July 2017.
The report found that ANZ’s directors’ attestation and assurance framework required improvement to become fully effective. Deloitte, which prepared the report, recommended a number of actions that directors must ensure were taken to ‘‘reach the level of maturity that was expected of ANZ’’.
Reserve Bank deputy governor Geoff Bascand said it was concerning Deloitte had found there was an element of complacency in ANZ’s historical approach to the attestation process and that its operation was piecemeal.
‘‘The Reserve Bank and the New Zealand public expect all banks to ensure their director attestation and assurance frameworks are operating at the highest possible standard.
‘‘ANZ’s directors must drive this change and ensure this benchmark is achieved. While we acknowledge ANZ’s work over the recent months to improve its framework and the attention these matters are now receiving, more is required.
‘‘We will continue to work with ANZ on this until the Reserve Bank is satisfied that ANZ’s overall approach to attestation meets our expectations.’’
To ensure that ANZ meets all of Deloitte’s recommendations, the Reserve Bank has issued a further request for review. That will require an external party to confirm by June 2021 that ANZ has implemented all of the recommendations.
The Deloitte report concludes that the sale of the St Heliers house by an ANZ subsidiary to Walsh did not breach ANZ policies or highlight system weaknesses in the attestation framework.
The Financial Markets Authority has also looked into the sale of the house and found that ANZ should have disclosed this as a related party transaction in its 2017 financial statements.
A report requested on ANZ’s compliance with the Reserve Bank’s capital requirements is due in February 2020.
ANZ chairman Sir John Key welcomed the findings of the report. ‘‘While we should never have been in the situation where a review was necessary, the work has given the company the opportunity to reflect on its processes and systems around its attestation framework and improve the performance of the organisation.’’