ANZ’s management culture slammed in report into Opes Prime fiasco

Two senior staff have resigned from ANZ bank with the release today of an internal report into the bank’s much criticised entanglement with failed broking house Opes Prime.

Two senior staff have resigned from ANZ bank with the release today of an internal report into the bank’s much criticised entanglement with failed broking house Opes Prime.

Chief risk officer David Stephen and institutional banking group managing director Peter Hodgson have departed the bank. The report found two unnamed employees had breached the bank’s code of conduct by improperly holding accounts with Opes Prime.

But the report, drafted by a committee led by ANZ chief executive Mike Smith and experienced finance industry figure David Crawford, also makes scathing judgements of the wider ANZ management culture.

It describes a management team largely ignorant of the nature of the high leverage model of the margin lending business run by Opes Prime and financially backed by the bank.

And where concerns were identified about the risks associated with ANZ’s equity finance business, procrastination by managers meant they were not addressed in a timely or effective fashion.

“The review committee found weaknesses in the management and oversight of the equity finance business within ANZ’s securities lending unit. Taken together, this meant that ANZ did not adequately identify and manage the range of risks which arose from the operation of a business of this nature,” Smith says.

The report contains a 13-point action plan to fix the problems identified, including withdrawal from the equity finance business, disciplinary action against some employees and the development of a new “reputation risk framework”.

“We have dealt clearly and squarely with the accountability issues and have a comprehensive remediation in place to address the short comings in management and control; we have identified particularly within risk management and the institutional division,” Smith says.

Related stories:

• Opes, Lift – now for the real villains: Alan Kohler
• ANZ, ASX & ASIC feel heat from Opes Prime meltdown