Scandal-bruised bank focuses on RBNZ reviews and naming CEO

It’s not every year that a company faces a scandal which soaks up the news pages for not only days but weeks and months.

When the ANZ announced in midJune that its long-standing former chief executive, David Hisco, was leaving following an investigation over expenses it could rightly have expected it to die down within a few days.

But after it emerged the bank had sold a luxury property to Hisco’s wife for what seemed to be less than market value the questions just kept coming.

Yesterday acting ANZ New Zealand chief executive Antonia Watson described it as a “challenging” year for the bank reputationally.

Asked by the Weekend Herald what it was going to take for the bank to move on, Watson was frank.

“I think from here the most important thing is we are learning from them and own up to mistakes when we make them and move on.”

Watson said one of the key milestones in moving on will be the release of the Reserve Bank’s section 95 review, which she expects to be made public in early December.

On June 24 the Reserve Bank requested the ANZ get two independent reports done to prove it is operating in a prudent manner.

Section 95 of the Reserve Bank of New Zealand Act 1989 gives the Reserve Bank the power to require a bank to provide a report by a Reserve Bank-approved, independent person.

These reviews can investigate such issues as risk management, corporate or financial matters, and operational systems.

The Reserve Bank said the first report would cover ANZ New Zealand’s compliance with its current and historic capital adequacy requirements.

In May the regulator revoked ANZ’s accreditation to model its own operational risk capital requirement due to a “persistent failure” in its controls and attestation process.

ANZ is one of four big banks in New Zealand that are accredited by the Reserve Bank to use their own risk models — the internal models approach — in calculating their regulatory capital requirements.

It is now required to use the standardised approach for calculating appropriate operational risk capital.

But it is the second report which will potentially be far more telling. It will assess the effectiveness of ANZ New Zealand’s director’s Attestation and Assurance framework, focusing on internal governance, risk management and internal controls.

This appears to be where the Reserve Bank has the power to look more closely at what has been going on with the ANZ board and Hisco.

Yesterday, Watson said the attestation review was still ongoing.